China Wants To Build A Grains "Superhighway" In Argentina 

China has stepped away from US agriculture imports and said it would bid on a project that could create a grains superhighway in Argentina, reported Reuters.

Chinese state-owned construction company (CCCC) is readying a bid that would allow it to dredge Argentina's Parana River, the country's only river that acts as a waterway for bulk vessels that transport soybean and corn from the Pampas farm belt to the South Atlantic.

China has increased agriculture purchases from Argentina since trade tensions between Washington and Beijing erupted last year.

Representatives of CCCC and its Shanghai Dredging unit have already held meetings with Argentine government and local port officials to design a plan that would allow larger bulk carriers to navigate the Parana River to and from the Argentine farm belt, to the South Atlantic, then to China, according to Reuters' sources.

CCCC is the top Chinese firm to lead international efforts in modernizing global transport hubs and shipping lanes to secure sustainable food supplies for China.

Margaret Myers, head of the Asia-Latin America program at the Inter-American Dialogue, a Washington-based think tank, told Reuters that Shanghai Dredging's interest in Parana is part of a much larger effort by Beijing to "invest across international agricultural supply chains to better control supply and pricing."

Argentina's Port and Maritime Activities Chamber held numerous meetings with other dredging firms and port operators who will also submit bids next year.

Reuters notes that Parana carries 80% of Argentine farm exports.

Marcos De Vincenzi, dredging manager for Servimagnus, CCCC's local partner, confirmed the Chinese firm's interest in the project, stating, "We think that the dredging of the waterway must be upgraded to meet its new traffic and trade needs."

Argentina will likely expand Parana's navigable waterway to accommodate large bulk carriers. This could allow the South American country to become a top player in the global grains market in the next 4 to 8 years.

Dredging Parna will give Argentina a significant advantage over its competitors. This means farmers in Argentina's farm belt can directly load their products onto bulk carriers. This is much different from Brazil and the US, who have to first transport products via truck or rail, over an extended distance, to the nearest port.

The Parna dredging permit is set to renewal in April 2021, involves keeping the shipping channel at adequate depths to allow bulk carriers to transit upriver to the farm belt. Large vessels traveling to and from the grains port of Rosario will continue to pay $80,000 in tolls after 2021.

Luxembourg-based dredger Jan De Nul currently holds the dredging permit for the river. It will be bidding with CCCC and other dredgers for the 2021 permit, industry sources told Reuters.

Servimagnus has offered to dredge Parana deeper than its current 34 feet, without raising tolls, said a port source who attended a meeting between the dredger and government officials.

"China is already our principal buyer of soybeans. For them to also have control over navigation would give them a very strong stance in negotiating prices," said the source.

China's move to establish a grains superhighway in Argentina shows how President Trump's trade war could leave American farmers with long-lasting, damaging effects that will never restore their pre-trade war market share in China.

If CCCC and Servimagnus win the bid next year, China could turn Argentina into an agriculture superpower by the mid/late 2020s.