Derivative Financial Instruments and Hedging Activities

3 Months Ended

Nov. 30, 2015

Derivative Financial Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Financial Instruments and Hedging Activities

Our derivative instruments primarily consist of commodity and freight futures and forward contracts and, to a minor degree, may include foreign currency and interest rate swap contracts. These contracts are economic hedges of price risk, but are not designated or accounted for as hedging instruments for accounting purposes, with the exception of certain interest rate swap contracts which are accounted for as cash flow or fair value hedges. Derivative instruments are recorded on our Consolidated Balance Sheets at fair value as described in Note 11, Fair Value Measurements.

The following tables present the gross fair values of derivative assets, derivative liabilities, and margin deposits (cash collateral) recorded on our Consolidated Balance Sheets along with the related amounts permitted to be offset in accordance with GAAP. We have elected not to offset derivative assets and liabilities when we have the right of offset under ASC Topic 210-20, Balance Sheet - Offsetting; or when the instruments are subject to master netting arrangements under ASC Topic 815-10-45, Derivatives and Hedging - Overall.

	November 30, 2015
			Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting
	Gross Amounts Recognized		Cash Collateral		Derivative Instruments		Net Amounts
	(Dollars in thousands)
Derivative Assets:
Commodity and freight derivatives	$	404,915	$	—	$	29,143	$	375,772
Foreign exchange derivatives	24,364		—		13,080		11,284
Interest rate derivatives - hedge	14,578		—		—		14,578
Total	$	443,857	$	—	$	42,223	$	401,634
Derivative Liabilities:
Commodity and freight derivatives	$	342,378	$	18,449	$	29,143	$	294,786
Foreign exchange derivatives	22,551		—		13,080		9,471
Interest rate derivatives - hedge	5,267		—		—		5,267
Interest rate derivatives - non-hedge	19		—		—		19
Total	$	370,215	$	18,449	$	42,223	$	309,543

	August 31, 2015
			Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting
	Gross Amounts Recognized		Cash Collateral		Derivative Instruments		Net Amounts
	(Dollars in thousands)
Derivative Assets:
Commodity and freight derivatives	$	476,071	$	—	$	58,401	$	417,670
Foreign exchange derivatives	23,154		—		11,682		11,472
Interest rate derivatives - hedge	14,216		—		—		14,216
Total	$	513,441	$	—	$	70,083	$	443,358
Derivative Liabilities:
Commodity and freight derivatives	$	427,052	$	11,482	$	58,401	$	357,169
Foreign exchange derivatives	37,598		—		11,682		25,916
Interest rate derivatives - hedge	6,058		—		—		6,058
Interest rate derivatives - non-hedge	61		—		—		61
Total	$	470,769	$	11,482	$	70,083	$	389,204

Derivatives Not Designated as Hedging Instruments

The majority of our derivative instruments have not been designated as hedging instruments for accounting purposes. The following table sets forth the pretax gains (losses) on derivatives not accounted for as hedging instruments that have been included in our Consolidated Statements of Operations for the three months endedNovember 30, 2015 and 2014. We have revised the information that we have historically included in this table below to correct for immaterial errors in the previously disclosed amounts. Although such gains and losses have been, and continue to be, appropriately recorded in the Consolidated Statements of Operations, the previous disclosures did not accurately reflect the derivative gains and losses in each period. These disclosure revisions did not materially impact our consolidated financial statements.

		For the Three Months Ended November 30,
	Location of Gain (Loss)	2015			2014
		(Dollars in thousands)
Commodity and freight derivatives	Cost of goods sold	$	35,046		$	73,683
Foreign exchange derivatives	Cost of goods sold	8,206			2,343
Interest rate derivatives	Interest, net	(704		)	29
Total		$	42,548		$	76,055

Commodity and Freight Contracts:

As of November 30, 2015 and August 31, 2015, we had outstanding commodity futures and freight contracts that were used as economic hedges, as well as fixed-price forward contracts related to physical purchases and sales of commodities. The table below presents the notional volumes for all outstanding commodity and freight contracts accounted for as derivative instruments.

	November 30, 2015		August 31, 2015
	Long	Short	Long	Short
	(Units in thousands)
Grain and oilseed - bushels	682,616	950,565	711,066	895,326
Energy products - barrels	11,647	7,886	17,238	11,676
Processed grain and oilseed - tons	695	3,120	706	2,741
Crop nutrients - tons	60	25	48	116
Ocean and barge freight - metric tons	4,231	2,180	5,916	1,962
Rail freight - rail cars	227	102	297	122
Natural gas - MMBtu	10,420	—	—	—
Livestock - pounds	40,520	25,000	10,480	1,280

Foreign Exchange Contracts:

We conduct a substantial portion of our business in U.S. dollars, but we are exposed to immaterial risks relating to foreign currency fluctuations primarily due to grain marketing transactions in South America and Europe and purchases of products from Canada. We use foreign currency derivative instruments to mitigate the impact of exchange rate fluctuations. Although our overall risk relating to foreign currency transactions is not significant, exchange rate fluctuations do, however, impact the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of U.S. agricultural products compared to the same products offered by alternative sources of world supply. The notional amounts of our foreign exchange derivative contracts were $731.7 million and $1.3 billion as of November 30, 2015 and August 31, 2015, respectively.

Derivatives Designated as Cash Flow or Fair Value Hedging Strategies

As of November 30, 2015 and August 31, 2015, we had certain derivatives designated as cash flow and fair value hedges.

Interest Rate Contracts:

We have outstanding interest rate swaps with an aggregate notional amount of $420.0 million designated as fair value hedges of portions of our fixed-rate debt. Our objective in entering into these transactions is to offset changes in the fair value of the debt associated with the risk of variability in the 3-month U.S. dollar LIBOR interest rate, in essence converting the fixed-rate debt to variable-rate debt. Offsetting changes in the fair values of both the swap instruments and the hedged debt are recorded contemporaneously each period and only create an impact to earnings to the extent that the hedge is ineffective. During the three months endedNovember 30, 2015, and 2014, we recorded offsetting fair value adjustments of $2.3 million, and $8.2 million, respectively, with no ineffectiveness recorded in earnings.

In fiscal 2015, we entered into forward-starting interest rate swaps with an aggregate notional amount of $300.0 million designated as cash flow hedges of the expected variability of future interest payments on our anticipated issuance of fixed-rate debt. During the first quarter of fiscal 2016, we determined that certain of the anticipated debt issuances would be delayed; and we consequently recorded an immaterial amount of losses on the ineffective portion of the related swaps in earnings. Additionally, we paid $6.4 million in cash to settle two of the interest rate swaps upon their scheduled termination dates. Because the issuances of fixed-rate debt continue to be probable of occurring, amounts recorded in other comprehensive income will remain there until issuance and will then be amortized into earnings over the life of the debt. The swaps expire in fiscal 2016 with immaterial amounts expected to be included in earnings during the next 12 months.

The following table presents the pretax gains (losses) recorded in other comprehensive income relating to cash flow hedges for the three months endedNovember 30, 2015 and 2014.

	For the Three Months Ended November 30,
	2015			2014
	(Dollars in thousands)
Interest rate derivatives	$	(6,818	)	$	(594	)

The following table presents the pretax gains (losses) relating to cash flow hedges that were reclassified from accumulated other comprehensive loss into income for the three months endedNovember 30, 2015 and 2014.

		For the Three Months Ended November 30,
	Location of Gain (Loss)	2015			2014
		(Dollars in thousands)
Interest rate derivatives	Interest income (expense)	$	(191	)	$	(203	)