Fair Value Measurements

6 Months Ended

Feb. 29, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 11.    Fair Value Measurements

The following table presents assets and liabilities included in our Consolidated Balance Sheets that are recognized at fair value on a recurring basis, and indicates the fair value hierarchy utilized to determine such fair value. As required by accounting standards, assets and liabilities are classified, in their entirety, based on the lowest level of input that is a significant component of the fair value measurement. The lowest level of input is considered Level 3. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the classification of fair value assets and liabilities within the fair value hierarchy levels. Fair value measurements at February 29, 2012, August 31, 2011 and February 28, 2011 were as follows:

	Fair Value Measurements at February 29, 2012
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Readily marketable inventories			$	1,406,976			$	1,406,976
Commodity and freight derivatives	$	17,043		191,226				208,269
Other assets		74,537						74,537
Total Assets	$	91,580	$	1,598,202			$	1,689,782
Liabilities:
Commodity and freight derivatives	$	51,975	$	243,609			$	295,584
Interest rate swap derivatives				586				586
Foreign currency derivatives		72						72
Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests					$	101,003		101,003
Mandatorily redeemable noncontrolling interests						330,689		330,689
Total Liabilities	$	52,047	$	244,195	$	431,692	$	727,934

	Fair Value Measurements at August 31, 2011
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)	Total
Assets:
Readily marketable inventories			$	1,288,049		$	1,288,049
Commodity and freight derivatives	$	85,082		549,056			634,138
Foreign currency derivatives		1,508					1,508
Other assets		68,246					68,246
Total Assets	$	154,836	$	1,837,105		$	1,991,941
Liabilities:
Commodity and freight derivatives	$	191,607	$	290,256		$	481,863
Interest rate swap derivatives				750			750
Total Liabilities	$	191,607	$	291,006		$	482,613

	Fair Value Measurements at February 28, 2011
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)	Total
Assets:
Readily marketable inventories			$	1,749,157		$	1,749,157
Commodity and freight derivatives	$	72,219		656,503			728,722
Other assets		71,452					71,452
Total Assets	$	143,671	$	2,405,660		$	2,549,331
Liabilities:
Commodity and freight derivatives	$	118,661	$	333,370		$	452,031
Foreign currency derivatives		121					121
Interest rate swap derivatives				551			551
Total Liabilities	$	118,782	$	333,921		$	452,703

Readily marketable inventories — Our readily marketable inventories primarily include our grain, oilseed, and minimally processed soy-based inventories that are stated at fair values. These commodities are readily marketable, have quoted market prices and may be sold without significant additional processing. We estimate the fair market values of these inventories included in Level 2 primarily based on exchange quoted prices, adjusted for differences in local markets. Changes in the fair market values of these inventories are recognized in our Consolidated Statements of Operations as a component of cost of goods sold.

Commodity, freight and foreign currency derivatives — Exchange traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified within Level 1. Our forward commodity purchase and sales contracts, flat price or basis fixed derivative contracts, ocean freight contracts and other OTC derivatives are determined using inputs that are generally based on exchange traded prices and/or recent market bids and offers, adjusted for location specific inputs, and are classified within Level 2. The location specific inputs are generally broker or dealer quotations, or market transactions in either the listed or OTC markets. Changes in the fair values of these contracts are recognized in our Consolidated Statements of Operations as a component of cost of goods sold.

Other assets — Our available-for-sale investments in common stock of other companies and our Rabbi Trust assets are valued based on unadjusted quoted prices on active exchanges and are classified within Level 1. Changes in the fair values of these other assets are primarily recognized in our Consolidated Statements of Operations as a component of marketing, general and administrative expenses.

Interest rate swap derivatives — Fair values of our interest rate swap liabilities are determined utilizing valuation models that are widely accepted in the market to value such OTC derivative contracts. The specific terms of the contracts, as well as market observable inputs, such as interest rates and credit risk assumptions, are factored into the models. As all significant inputs are market observable, all interest rate swaps are classified within Level 2. Changes in the fair values of contracts not designated as hedging instruments for accounting purposes are recognized in our Consolidated Statements of Operations as a component of interest, net. Changes in the fair values of contracts designated as hedging instruments are deferred to accumulated other comprehensive loss in the equity section of our Consolidated Balance Sheets and are amortized into earnings within interest, net over the term of the agreements.

Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests — The fair value of the accrued liability was calculated utilizing an average price option model, an adjusted Black-Scholes pricing model commonly used in the energy industry to value options. The model uses market observable inputs and unobservable inputs. Due to significant unobservable inputs used in the pricing model, the liability is classified within Level 3. Significant inputs used in the pricing model are as follows:

	Fiscal 2012
Forward crack spread margin on February 29	$11.00-$16.17
Contractual target crack spread margin	$17.50
Expected volatility	93.31%
Risk-free interest rate	0.18-0.87%
Expected life (years)	1.50-5.51

The expected volatility was calculated using annualized daily historical market crack spread data. We adjust the volatility for market fluctuations on a quarterly basis.

Mandatorily redeemable noncontrolling interests — The fair value is calculated by discounting each future redemption payment to its present value as of the balance sheet date. Our long-term borrowing rates were used as the discount rates for the present value calculations. We believe the discount rates that are used are commensurate with the risk inherent in our cash flows. The inputs are significant unobservable inputs, and the liability is classified within Level 3.

The following table represents a reconciliation of liabilities measured at fair value using significant unobservable inputs (Level 3) for the three months ended February 29, 2012:

	Level 3 Liabilities
	Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests			Mandatorily redeemable noncontrolling interests
Balances, December 1, 2011	$	105,188		$	328,676
Total gains included in cost of goods sold		(4,185	)
Total losses included in interest, net					2,013
Balances, February 29, 2012	$	101,003		$	330,689

The following table represents a reconciliation of liabilities measured at fair value using significant unobservable inputs (Level 3) for the six months ended February 29, 2012:

	Level 3 Liabilities
	Accrued liability for contingent crack spread payment related to purchase of noncontrolling interests			Mandatorily redeemable noncontrolling interests
Balances, September 1, 2011	$	—		$	—
Purchases		105,188			328,676
Total gains included in cost of goods sold		(4,185	)
Total losses included in interest, net					2,013
Balances, February 29, 2012	$	101,003		$	330,689

There were no significant transfers between Level 1, Level 2, and Level 3 assets and liabilities.