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Derivatives Instruments and Hedging Activities
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Instruments and Hedging Activities Derivative Instruments and Hedging Activities
We are exposed to market risk stemming from changes in commodity prices (primarily corn and natural gas), foreign currency exchange rates and interest rates. In the normal course of business, we actively manage our exposure to these market risks by entering various hedging transactions authorized under established policies that place controls on these activities. These transactions utilize exchange-traded derivatives or over-the-counter derivatives with investment grade counterparties. We use derivative financial instruments that consist of commodity-related futures, options and swap contracts, foreign currency-related forward contracts, interest rate swaps and treasury locks (“T-Locks”).
Commodity price hedging: Our principal use of derivative financial instruments is to manage commodity price risk relating to anticipated purchases of corn and natural gas that we intend to use in the manufacturing process, generally over the next 12 to 24 months. We maintain a commodity-price risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by commodity-price volatility. To manage price risk related to corn purchases primarily in North America, we use corn futures and option contracts that trade on regulated commodity exchanges to lock in corn costs associated with fixed-priced customer sales contracts. We use soybean oil and soybean meal futures contracts in North America that trade on regulated commodity exchanges to hedge sales of our co-products. We also use over-the-counter natural gas swaps primarily in North America to hedge a portion of our natural gas usage. These derivative financial instruments limit the impact that volatility resulting from fluctuations in market prices will have on corn and natural gas purchases, as well as co-product sales. Our natural gas, soybean meal and the majority of our corn and soybean oil derivatives have been designated as cash flow hedging instruments. A portion of our corn and soybean oil derivatives are not designated as hedging instruments for accounting purposes.
We had outstanding futures and option contracts that hedged the forecasted purchase of approximately 109 million and 120 million bushels of corn as of December 31, 2023 and 2022, respectively. We also had outstanding swap contracts that hedged the forecasted purchase of approximately 28 million and 31 million mmbtus of natural gas as of December 31, 2023 and 2022, respectively.
Foreign currency hedging: Due to our global operations, including operations in many emerging markets, we are exposed to fluctuations in foreign currency exchange rates. As a result, we have exposure to translational foreign-exchange risk when the results of our foreign net assets and operations are translated to U.S. dollars and to transactional foreign-exchange risk when transactions not denominated in the functional currency are revalued. Our foreign-exchange risk management strategy uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage our transactional foreign exchange risk. We enter into foreign currency derivative instruments that are designated as cash flow hedging instruments as well as instruments not designated as hedging instruments for accounting purposes in order to mitigate transactional foreign-exchange risk.
We hedge certain assets using foreign currency derivatives not designated as hedging instruments, which had a notional value of $694 million and $405 million as of December 31, 2023 and 2022, respectively. We also hedge certain liabilities using foreign currency derivatives not designated as hedging instruments, which had a notional value of $182 million and $239 million as of December 31, 2023 and 2022, respectively.
We hedge certain assets using foreign currency cash flow hedging instruments, which had a notional value of $449 million and $668 million as of December 31, 2023 and 2022, respectively. We also hedge certain liability positions using foreign currency cash flow hedging instruments, which had a notional value of $621 million and $840 million as of December 31, 2023 and 2022, respectively.
Interest rate hedging: We assess our exposure to variability in interest rates by identifying and monitoring changes in interest rates that may adversely impact future cash flows and the fair value of existing debt instruments and by evaluating hedging opportunities. Our risk management strategy is to monitor interest rate risk attributable to our outstanding and forecasted debt obligations as well as our offsetting hedge positions. Derivative financial instruments that we have used to manage our interest rate risk consist of interest rate swaps and T-Locks.
We periodically enter into T-Locks to hedge our exposure to interest rate changes. We have settled T-Locks associated with the issuance of our senior notes due in 2030 and 2050. The realized loss upon settlement of these T-Locks was recorded in AOCL and is amortized into earnings over the term of the senior notes. We did not have open T-Locks as of December 31, 2023 and 2022.
The derivative instruments designated as cash flow hedges included in AOCL as of December 31, 2023 and 2022, are as follows:
Derivatives in Cash Flow Hedging RelationshipsGains (Losses) included in AOCL as of December 31,
20232022
Commodity contracts, net of income tax effect of $17 and $3, respectively
$(46)$8 
Foreign currency contracts, net of income tax effect of $ 1 and $—, respectively
— 1 
Interest rate contracts, net of income tax effect of $1
(2)(3)
Total$(48)$6 
As of December 31, 2023, AOCL included $46 million of net losses (net of income taxes of $16 million) on commodities-related derivative instruments, T-Locks and foreign currency hedges designated as cash flow hedges that are expected to be reclassified into earnings during the next twelve months.
The fair value and balance sheet location of our derivative instruments, presented gross in the Consolidated Balance Sheets, are as follows:
Fair Value of Hedging Instruments as of December 31, 2023
Designated Hedging InstrumentsNon-Designated Hedging Instruments
Balance Sheet LocationCommodity ContractsForeign Currency ContractsTotalCommodity ContractsForeign Currency ContractsTotal
Accounts receivable, net$6 $11 $17 $— $5 $5 
Other assets— 4 4 — — — 
Assets6 15 21 — 5 5 
Accounts payable and accrued liabilities44 14 58 2 12 14 
Non-current liabilities2 2 4 — — — 
Liabilities46 16 62 2 12 14 
Net Assets/(Liabilities)$(40)$(1)$(41)$(2)$(7)$(9)
Fair Value of Hedging Instruments as of December 31, 2022
Designated Hedging InstrumentsNon-Designated Hedging Instruments
Balance Sheet LocationCommodity ContractsForeign Currency ContractsTotalCommodity ContractsForeign Currency ContractsTotal
Accounts receivable, net$28 $20 $48 $— $5 $5 
Other assets167———
Assets292655—55
Accounts payable and accrued liabilities222345167
Non-current liabilities3912———
Liabilities253257167
Net Assets/(Liabilities)$4 $(6)$(2)$(1)$(1)$(2)
Additional information relating to our derivative instruments are as follows:
Derivatives in Cash Flow Hedging RelationshipsGains (Losses)
Recognized in OCL on Derivatives		Income Statement
Location		Gains (Losses)
Reclassified from AOCL into Income
202320222021202320222021
Commodity contracts$(161)$202 $218 Cost of sales$(87)$261 $211 
Foreign currency contracts10 8 — Net sales/Cost of sales10 7 (1)
Interest rate contracts— — — Financing costs(1)— (1)
Total$(151)$210 $218 $(78)$268 $209