Derivative Financial Instruments and Hedging Activities

9 Months Ended

May 31, 2014

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 discussed in Note 10, Fair Value Measurements.

Even though we have netting arrangements for our exchange-traded futures and options contracts and certain over-the-counter (OTC) contracts, we report our derivatives on a gross basis on our Consolidated Balance Sheets. Our associated margin deposits are also reported on a gross basis. Many of our derivative contracts with futures and options brokers require us to make both initial margin deposits of cash or other assets and subsequent deposits, depending on changes in commodity prices, in order to comply with applicable regulations. Our margin deposit assets are held by external brokers in segregated accounts and will be used to settle the associated derivative contracts on their specified settlement dates.

As of May 31, 2014, August 31, 2013 and May 31, 2013, we had the following outstanding purchase and sales contracts:

	May 31, 2014		August 31, 2013		May 31, 2013
	Purchase Contracts	Sales Contracts	Purchase Contracts	Sales Contracts	Purchase Contracts	Sales Contracts
	(Units in thousands)
Grain and oilseed - bushels	717,181	969,100	521,979	806,295	519,293	806,244
Energy products - barrels	20,517	35,676	12,626	21,312	13,833	20,125
Soy products - tons	33	962	24	847	70	325
Crop nutrients - tons	1,077	1,194	968	1,050	675	778
Ocean and barge freight - metric tons	1,148	290	1,225	151	888	130
Rail freight - rail cars	339	159	220	43	242	39
Livestock - pounds	—	47,800	—	17,280	7,760	—

The following tables present the gross amounts of derivative assets, derivative liabilities, and margin deposits (cash collateral) recorded on the 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 FASB Accounting Standards Codification (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.

	May 31, 2014
			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	$	544,198	$	—	$	52,103	$	492,095
Foreign exchange derivatives	182		—		77		105
Interest rate derivatives - hedge	2		—		—		2
Total Derivative Assets	$	544,382	$	—	$	52,180	$	492,202
Derivative Liabilities:
Commodity and freight derivatives	$	410,148	$	—	$	52,103	$	358,045
Foreign exchange derivatives	2,153		—		77		2,076
Interest rate derivatives - non-hedge	170		—		—		170
Total Derivative Liabilities	$	412,471	$	—	$	52,180	$	360,291

	August 31, 2013
			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	$	468,673	$	—	$	53,107	$	415,566
Foreign exchange derivatives	7,079		—		957		6,122
Interest rate derivatives - hedge	24,135		—		—		24,135
Interest rate derivatives - non-hedge	3		—		3		—
Total Derivative Assets	$	499,890	$	—	$	54,067	$	445,823
Derivative Liabilities:
Commodity and freight derivatives	$	458,893	$	1,591	$	53,107	$	404,195
Foreign exchange derivatives	5,925		—		957		4,968
Interest rate derivatives - non-hedge	248		—		3		245
Total Derivative Liabilities	$	465,066	$	1,591	$	54,067	$	409,408

	May 31, 2013
			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	$	510,258	$	—	$	32,678	$	477,580
Foreign exchange derivatives	5,043		—		—		5,043
Interest rate derivatives - hedge	9,160		—		—		9,160
Total Derivative Assets	$	524,461	$	—	$	32,678	$	491,783
Derivative Liabilities:
Commodity and freight derivatives	$	452,289	$	56,423	$	32,678	$	363,188
Foreign exchange derivatives	3,883		—		—		3,883
Interest rate derivatives - non-hedge	304		—		—		304
Total Derivative Liabilities	$	456,476	$	56,423	$	32,678	$	367,375

In fiscal 2013, we entered into derivative contracts designated as cash flow hedging instruments that were terminated in February 2014 as the issuance of the underlying debt was no longer probable. As a result, a $13.5 million gain was reclassified from accumulated other comprehensive loss into net income. This pre-tax gain is included as a component of interest, net in the Consolidated Statements of Operations for the nine months ended May 31, 2014. As of May 31, 2014, August 31, 2013 and May 31, 2013, the unrealized gains deferred to accumulated other comprehensive loss were as follows:

	May 31, 2014		August 31, 2013		May 31, 2013
	(Dollars in thousands)
Unrealized gains (losses) included in accumulated other comprehensive loss, net of tax expense of $0, $9.2 million and $3.5 million, respectively	$	—	$	14,930	$	5,666

In April 2014, we entered into an interest rate swap with a notional amount of $130.0 million designated as a fair value hedge of a portion of our fixed-rate debt. Our objective 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 instrument and the hedged debt are recorded contemporaneously each period and only create an impact to earnings to the extent that the hedge is ineffective.

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 and nine months endedMay 31, 2014 and 2013.

		For the Three Months Ended May 31,						For the Nine Months Ended May 31,
	Location of Gain (Loss)	2014			2013			2014			2013
		(Dollars in thousands)
Commodity and freight derivatives	Cost of goods sold	$	157,461		$	(22,457	)	$	218,883		$	(452,747	)
Foreign exchange derivatives	Cost of goods sold	(5,685		)	(13,648		)	(7,688		)	2,570
Interest rate derivatives	Interest, net	24			114			74			240
Total		$	151,800		$	(35,991	)	$	211,269		$	(449,937	)