We utilize derivative financial instruments to primarily manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative financial instruments include interest

rate risk, foreign currency exchange risk and commodity price risk. While certain of our derivative financial instruments are designated as hedging instruments, we also enter into derivative financial instruments that are designed to hedge a risk, but are not designated as hedging instruments and therefore do not qualify for hedge accounting. These derivative financial instruments are adjusted to current fair value through earnings at the end of each period.

Interest Rate Risk Management – We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.

Foreign Currency Exchange Risk Management – We conduct business in several major international currencies and are, therefore, subject to risks associated with changing foreign currency exchange rates. We enter into various contracts that change in value as foreign currency exchange rates change to manage this exposure. Such contracts limit exposure to both favorable and unfavorable foreign currency exchange rate fluctuations. The translation of foreign currencies into U.S. dollars also subjects us to exposure related to fluctuating foreign currency exchange rates; however, derivative financial instruments are not used to manage this risk.

Commodity Price Risk Management – We are exposed to changes in the price of certain commodities, including steel, natural gas, copper, zinc and other raw materials, and our utility requirements. Our objective is to reduce earnings and cash flow volatility associated with forecasted purchases and sales of these commodities to allow management to focus its attention on business operations. Accordingly, we enter into derivative contracts to manage the associated price risk.

We are exposed to counterparty credit risk on all of our derivative financial instruments. Accordingly, we have established and maintain strict counterparty credit guidelines. We have credit support agreements in place with certain counterparties to limit our credit exposure. These agreements require either party to post cash collateral if its cumulative market position exceeds a predefined liability threshold. Amounts posted to the margin accounts accrue interest at market rates and are required to be refunded in the period in which the cumulative market position falls below the required threshold. We do not have significant exposure to any one counterparty and management believes the risk of loss is remote and, in any event, would not be material.

Refer to "Note S – Fair Value Measurements" for additional information regarding the accounting treatment for our derivative financial instruments, as well as how fair value is determined.

The following table summarizes the fair value of our derivative financial instruments and the respective line in which they were recorded in the consolidated balance sheet at May 31, 2021:

	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
(in thousands)	Location	Value		Location	Value
Derivatives designated as hedging instruments:
Commodity contracts	Receivables	$	53,125	Accounts payable	$	-
	Other assets		23	Other liabilities		111
Totals		$	53,148		$	111
Derivatives not designated as hedging instruments:
Commodity contracts	Receivables	$	24,621	Accounts payable	$	14,554
	Other assets		379	Other liabilities		-
			25,000			14,554
Foreign currency exchange contracts	Receivables		-	Accounts payable		532
Totals		$	25,000		$	15,086
Total derivative financial instruments		$	78,148		$	15,197

The amounts in the table above reflect the fair value of the Company’s derivative financial instruments on a net basis, where allowable under master netting arrangements. Had these amounts been recognized on a gross basis, the impact would have been a $16,594,000 increase in receivables with a corresponding increase in accounts payable.

The following table summarizes the fair value of our derivative financial instruments and the respective line in which they were recorded in the consolidated balance sheet at May 31, 2020:

	Asset Derivatives			Liability Derivatives
	Balance			Balance
	Sheet	Fair		Sheet	Fair
(in thousands)	Location	Value		Location	Value
Derivatives designated as hedging instruments:
Commodity contracts	Receivables	$	-	Accounts payable	$	4,294
	Other assets		79	Other liabilities		479
Total		$	79		$	4,773
Derivatives not designated as hedging instruments:
Commodity contracts	Receivables	$	-	Accounts payable	$	3,826
	Other assets		96	Other liabilities		178
			96			4,004
Foreign currency exchange contracts	Receivables		6	Accounts payable		-
Total		$	102		$	4,004
Total derivative financial instruments		$	181		$	8,777

The amounts in the table above reflect the fair value of the Company’s derivative financial instruments on a net basis, where allowable under master netting arrangements. Had these amounts been recognized on a gross basis, the impact would have been a $1,780,000 increase in receivables with a corresponding increase in accounts payable.

We enter into derivative financial instruments to hedge our exposure to changes in cash flows attributable to interest rate and commodity price fluctuations associated with certain forecasted transactions. These derivative financial instruments are designated and qualify as cash flow hedges. Accordingly, the effective portion of the gain or loss on the derivative financial instrument is reported as a component of OCI and reclassified into earnings in the same line associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative financial instrument is recognized in earnings immediately.

The following table summarizes our cash flow hedges outstanding at May 31, 2021:

The following table summarizes the gain (loss) recognized in OCI and the gain (loss) reclassified from AOCI into earnings for derivative financial instruments designated as cash flow hedges during fiscal 2021 and fiscal 2020:

				Location of	Gain (Loss)
	Gain (Loss)			Gain (Loss)	Reclassified
	Recognized			Reclassified from AOCI	from AOCI
(in thousands)	in OCI			into Net Earnings	into Net Earnings
For the fiscal year ended May 31, 2021:
Interest rate contracts	$	-		Interest expense	$	(1,711	)
Commodity contracts		93,417		Cost of goods sold		11,692
Totals	$	93,417			$	9,981

For the fiscal year ended May 31, 2020:
Interest rate contracts	$	(326	)	Interest expense	$	391
Commodity contracts		(9,171	)	Cost of goods sold		(12,208	)
Foreign currency exchange contracts		-		Miscellaneous income, net		(19	)
Totals	$	(9,497	)		$	(11,836	)

The estimated net amount of the gains recognized in AOCI at May 31, 2021 expected to be reclassified into net earnings within the succeeding twelve months is $58,732,000 (net of tax of $18,169,000 ). This amount was computed using the fair value of the cash flow hedges at May 31, 2021 and will change before actual reclassification from other comprehensive income to net earnings during fiscal 2022.

We enter into foreign currency exchange contracts to manage our foreign currency exchange rate exposure related to inter-company and financing transactions that do not meet the requirements for hedge accounting treatment. We also enter into certain commodity contracts that do not qualify for hedge accounting treatment. Accordingly, these derivative financial instruments are adjusted to current market value at the end of each period through earnings.

The following table summarizes our economic (non-designated) derivative financial instruments outstanding at May 31, 2021:

The following table summarizes the gain (loss) recognized in earnings for economic (non-designated) derivative financial instruments during fiscal 2021 and fiscal 2020:

		Gain (Loss)
		Recognized in Earnings
		Fiscal Year Ended
	Location of Gain (Loss)	May 31,
(in thousands)	Recognized in Earnings	2021			2020
Commodity contracts	Cost of goods sold	$	47,546		$	(8,555	)
Foreign currency exchange contracts	Miscellaneous income, net		(765	)		(9	)
Total		$	46,781		$	(8,564	)