China is building megaports in South America to feed its need for crops

Mint

13-05-2025

China has reassured its citizens they would have enough to eat without U.S. crops. It will have to unclog Latin America's largest port first.
The decrepit port in this Atlantic coast city is the main gateway for South American exports of soybeans and other agricultural goods that represent China's only viable alternative supply to U.S. exports. Though China has reduced its reliance on U.S. foodstuffs, crops are still among the top U.S. exports to China.
China's state-owned agricultural conglomerate, Cofco, is building its biggest export terminal outside China at the port to manage shipments of corn, sugar and soybeans. It would increase the company's annual export capacity to 14 million tons from 4.5 million, but isn't expected to reach full capacity until next year.
The Santos port fits into China's wider plan to secure access to South America's agricultural bounty amid shortages of water and arable land at home. Chinese companies are laying hundreds of miles of railroad across Brazil's agricultural heartland and finishing work on a $3.5 billion deep-water port on Peru's Pacific coast.
The trade war with the U.S. has heightened the urgency of these projects. Chinese leader Xi Jinping met South American leaders including Brazilian President Luiz Inácio Lula da Silva in Beijing on Monday to discuss their deepening ties.
Brazilian officials are welcoming the chance to draw foreign investment to the country's rickety roads, railroads and ports.
'We need more and more infrastructure," Renan Filho, Brazil's transportation minister, said in an interview.
A worker in the Cofco terminal at the Port of Santos in January.
Squeezed between rows of warehouses and the ruins of colonial-era sugar mills at the heart of the Santos port, a towering crane was putting the finishing touches to three Cofco silos, each the size of an apartment building.
Since entering the Brazilian market in 2014 by acquiring Dutch grain trader Nidera and the agricultural unit of Hong Kong-based Noble, Cofco has relied on third-party terminals at an extra cost of some 15%. But in March 2022, Cofco secured a 25-year concession to develop the STS11 terminal at Santos Port, committing to invest some $285 million into the site.
China's state ports conglomerate China Merchants Port Holdings had already acquired a 90% stake in the operator of Paranaguá, another busy port in Brazil's south, in 2017 for $925 million. The state company China Railway has also been building part of a railroad that connects Brazil's central farming belt to ports in eastern and northern Brazil.
In Peru, Cosco Shipping built a deep-water megaport to speed trade between Asia and South America. Beijing has also discussed with the region's governments a vast railroad running from Peru's Pacific coast to Brazilian ports on the Atlantic.
Chinese officials on April 28 said they can easily drop U.S. crop imports and still hit their 5% growth target this year. Brazil—and, to a lesser extent, Argentina—would fill the void, according to analysts tracking agricultural markets.
Brazil benefited from global trade tensions during President Trump's first term, displacing U.S. exports to China. Between 2017 and 2024, China increased imports of Brazilian soybeans 35% to 73 million tons, while cutting imports of U.S. soybeans 14% to 27 million tons, according to the Center for Strategic and International Studies in Washington.
'You only have to see what happened in the first Trump administration," said Cláudia Trevisan, head of the Brazil-China Business Council. 'Trump imposed tariffs on imports from China, China retaliated, and Brazil increased its exports to China of products that the U.S. also used to supply, mainly soybeans."
By 2023, Brazil accounted for about a quarter of Chinese agricultural imports, while the U.S. share had dropped to about 14%, government data show. Brazil now supplies about 70% of soybean shipments to China. About 30% pass through Santos, with smaller shares sent through Paranaguá and the northern ports of Itaqui and Barcarena.
Santos can hardly keep up. Santos handled a record 180 million tons of cargo last year, about 60% of it agricultural goods. Strikes are commonplace. More than 90% of Brazil's port capacity for exporting agricultural bulk goods is in use, exceeding the operational safety limit of 85%, according to logistics consulting firm Macroinfra.
The Cofco terminal in the port of Santos isn't expected to reach full capacity until next year.
Because the country lacks the extensive railroads that carry soybeans and corn in the U.S., crops mainly arrive in Santos by truck—as many as 20,000 a day, port authorities say. Traffic jams snake up to 20 miles down nearby highways.
'God knows how anything leaves this country," said Silvia Ferreira, a schoolteacher in Santos, home to almost half a million people.
Farms are also under pressure, particularly as fertilizer costs soar.
Brazil's temperate climate allows for three harvests a year, compared with the one most countries manage. But this drains the land of nutrients, and Brazil's clay-based soils struggle to retain minerals during heavy rains. So fertilizer is critical.
Brazil, which imports 85% of its fertilizers, mainly from Russia, was already struggling to secure what it needed after Russia invaded Ukraine. Trade tensions between the U.S. and Canada, a top fertilizer supplier to its neighbor, have further pushed up global prices.
'Brazil has so much potential, yes, but that doesn't mean it can wave a magic wand and, overnight, expand production and meet China's demands," said Plinio Nastari, head of agricultural consulting firm Datagro. 'It has its own problems and all of this is part of the equation."
A drone view shows silos being built at the Cofco export terminal in the port of Santos.
Write to Samantha Pearson at [e-mail]