(Bloomberg) -- The year is ending on a high note for American soybean farmers, with prices on pace for their best monthly performance since 2016.
Futures in Chicago jumped on the news that Chinese Vice-Premier Liu He is set to lead a delegation to Washington this Saturday, likely to sign the first phase of a trade deal with the U.S. That accord includes a pledge by China to increase purchases of American farm goods, with President Donald Trump pegging the amount at as much as $50 billion. Buying anywhere close to that level would bring a significant demand boost to exports of soybeans, pork and other commodities.
The December soy rally is a welcome turnaround for embattled American farmers. This year brought bouts of wild weather that hampered both planting and harvesting, while the trade war meant reduced demand, low prices and deteriorating financial conditions. Soy futures jumped about 0.9%, on Monday, bringing this month’s gain to a little more than 8%, or the biggest advance for a most-active contract since April 2016.
“We have a quiet feeling of optimism about a trade deal,” Rich Nelson, chief strategist at Allendale Inc. in McHenry, Illinois, said by phone. “We’re slowly prodding along here, and the story is not unwrapping.”
The rally in soy comes as many other raw materials have also gained amid weather-related growing challenges for crops and a weaker U.S. dollar. The Bloomberg Commodity Spot Index has hit the highest since November 2018.