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Derivative Instruments and Hedging Activities | 12 Months Ended
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Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments & Hedging Activities | Derivative Instruments & Hedging Activities Derivatives Not Designated as Hedging Instruments The majority of the Company’s derivative instruments have not been designated as hedging instruments. The Company uses exchange-traded futures and exchange-traded and OTC options contracts to manage its net position of merchandisable agricultural commodity inventories and forward cash purchase and sales contracts to reduce price risk caused by market fluctuations in agricultural commodities and foreign currencies. The Company also uses exchange-traded futures and exchange-traded and OTC options contracts as components of merchandising strategies designed to enhance margins. The results of these strategies can be significantly impacted by factors such as the correlation between the value of exchange-traded commodities futures contracts and the value of the underlying commodities, counterparty contract defaults, and volatility of freight markets. Derivatives, including exchange traded contracts and physical purchase or sale contracts, and inventories of certain merchandisable agricultural commodities, which include amounts acquired under deferred pricing contracts, are stated at market value. Inventory is not a derivative and therefore fair values of and changes in fair values of inventories are not included in the tables below. The following table sets forth the fair value of derivatives not designated as hedging instruments as of December 31, 2018 and 2017.
| December 31, 2018 |  | December 31, 2017
| Assets |  | Liabilities |  | Assets |  | Liabilities
| (In millions)
Foreign Currency Contracts | $ | 175 |  |  | $ | 152 |  |  | $ | 63 |  |  | $ | 92 |
Commodity Contracts | 461 |  |  | 589 |  |  | 386 |  |  | 371 |
Total | $ | 636 |  |  | $ | 741 |  |  | $ | 449 |  |  | $ | 463 |
The following table sets forth the pre-tax gains (losses) on derivatives not designated as hedging instruments that have been included in the consolidated statements of earnings for the years ended December 31, 2018, 2017, and 2016.
|  |  | Cost of |  | Other expense (income) - net |  |
|  |  | products |  |  |
(In millions) | Revenues |  | sold |  |  |
For the Year Ended December 31, 2018 |  |  |  |  |  |  |
Consolidated Statement of Earnings | $ | 64,341 |  |  | $ | 60,160 |  |  | $ | 101 |  |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |
Foreign Currency Contracts | $ | 5 |  |  | $ | (139 | ) |  | $ | (177 | ) |  |
Commodity Contracts | — |  |  | 258 |  |  | — |  |  |
Total gain (loss) recognized in earnings | $ | 5 |  |  | $ | 119 |  |  | $ | (177 | ) |  | $ | (53 | )
For the Year Ended December 31, 2017 |  |  |  |  |  |  |
Consolidated Statement of Earnings | $ | 60,828 |  |  | $ | 57,310 |  |  | $ | (10 | ) |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |
Foreign Currency Contracts | $ | (10 | ) |  | $ | 58 |  |  | $ | 214 |  |  |
Commodity Contracts | — |  |  | 375 |  |  | — |  |  |
Total gain (loss) recognized in earnings | $ | (10 | ) |  | $ | 433 |  |  | $ | 214 |  |  | $ | 637 |
For the Year Ended December 31, 2016 |  |  |  |  |  |  |
Consolidated Statement of Earnings | $ | 62,346 |  |  | $ | 58,728 |  |  | $ | (149 | ) |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |
Foreign Currency Contracts | $ | (35 | ) |  | $ | 291 |  |  | $ | (225 | ) |  |
Commodity Contracts | — |  |  | (383 | ) |  | — |  |  |
Total gain (loss) recognized in earnings | $ | (35 | ) |  | $ | (92 | ) |  | $ | (225 | ) |  | $ | (352 | )
Changes in the market value of inventories of certain merchandisable agricultural commodities, forward cash purchase and sales contracts, exchange-traded futures, and exchange-traded and OTC options contracts are recognized in earnings immediately as a component of cost of products sold. Derivatives Designated as Cash Flow or Fair Value Hedging Strategies As of December 31, 2018 and 2017, the Company had certain derivatives designated as cash flow and fair value hedges. The Company uses interest rate swaps designated as fair value hedges to protect the fair value of $496 million in fixed-rate debt due to changes in interest rates. The changes in the fair value of the interest rate swaps and the underlying fixed-rate debt are recorded in other (income) expense - net. The terms of the interest rate swaps match the terms of the underlying debt. At December 31, 2018, the Company had $4 million in other current liabilities representing the fair value of the interest rate swaps and a corresponding decrease in the underlying debt for the same amount with no net impact to earnings. For each of the commodity hedge programs described below, the derivatives are designated as cash flow hedges. Assuming normal market conditions, the changes in the market value of such derivative contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. Once the hedged item is recognized in earnings, the gains/losses arising from the hedge are reclassified from AOCI to either revenues or cost of products sold, as applicable. As of December 31, 2018, the Company had $31 million of after-tax gains in AOCI related to gains and losses from commodity cash flow hedge transactions. The Company expects to recognize $31 million of these after-tax gains in its consolidated statement of earnings during the next 12 months. The Company uses futures or options contracts to hedge the purchase price of anticipated volumes of corn to be purchased and processed in a future month. The objective of this hedging program is to reduce the variability of cash flows associated with the Company’s forecasted purchases of corn. The Company’s corn processing plants currently grind approximately 72 million bushels of corn per month. During the past 12 months, the Company hedged between 23% and 95% of its monthly anticipated grind. At December 31, 2018, the Company had designated hedges representing between 7% to 60% of its anticipated monthly grind of corn for the next 12 months. The Company, from time to time, also uses futures, options, and swaps to hedge the sales price of certain ethanol sales contracts. The Company has established hedging programs for ethanol sales contracts that are indexed to unleaded gasoline prices and to various exchange-traded ethanol contracts. The objective of these hedging programs is to reduce the variability of cash flows associated with the Company’s sales of ethanol. During the past 12 months, the Company hedged between 2 million and 135 million gallons of ethanol sales per month under these programs. At December 31, 2018, the Company had designated hedges representing between 0 to 52 million gallons of ethanol sales per month over the next 12 months. During the first quarter of 2018, the Company started using futures and options contracts to hedge the purchase price of anticipated volumes of soybeans to be purchased and processed in a future month for certain of its U.S. soybean crush facilities. The Company also uses futures or options contracts to hedge the sales prices of anticipated soybean meal and soybean oil sales proportionate to the soybean crushing process at these facilities. During the past 12 months, the Company hedged between 0% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities. The Company has designated hedges representing between 0% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities over the next 12 months. The following table sets forth the fair value of derivatives designated as hedging instruments as of December 31, 2018 and 2017.
| December 31, 2018 |  | December 31, 2017
| Assets |  | Liabilities |  | Assets |  | Liabilities
| (In millions)
Interest Rate Contracts | $ | — |  |  | $ | 20 |  |  | $ | — |  |  | $ | 1 |
Total | $ | — |  |  | $ | 20 |  |  | $ | — |  |  | $ | 1 |
The following table sets forth the pre-tax gains (losses) on derivatives designated as hedging instruments that have been included in the consolidated statement of earnings for the years ended December 31, 2018, 2017, and 2016.
|  |  | Cost of products sold |  | Interest expense |  | Other expense (income) - net |  |
(In millions) | Revenues |  |  |  |  |
For the Year Ended December 31, 2018 |  |  |  |  |  |  |  |  |
Consolidated Statement of Earnings | $ | 64,341 |  |  | $ | 60,160 |  |  | $ | 364 |  |  | $ | 101 |  |  |
Effective amounts recognized in earnings |  |  |  |  |  |  |  |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |  |  |
Interest Contracts | — |  |  | — |  |  | 1 |  |  | — |  |  |
Commodity Contracts | 36 |  |  | (113 | ) |  | — |  |  | — |  |  |
Total gain (loss) recognized in earnings | $ | 36 |  |  | $ | (113 | ) |  | $ | 1 |  |  | $ | — |  |  | $ | (76 | )
For the Year Ended December 31, 2017 |  |  |  |  |  |  |  |  |
Consolidated Statement of Earnings | $ | 60,828 |  |  | $ | 57,310 |  |  | 330 |  |  | $ | (10 | ) |  |
Effective amounts recognized in earnings |  |  |  |  |  |  |  |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |  |  |
Foreign Currency Contracts | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (2 | ) |  |
Interest Rate Contracts | — |  |  | — |  |  | 1 |  |  | — |  |  |
Commodity Contracts | (1 | ) |  | (45 | ) |  | — |  |  | — |  |  |
Total gain (loss) recognized in earnings | $ | (1 | ) |  | $ | (45 | ) |  | $ | 1 |  |  | $ | (2 | ) |  | $ | (47 | )
For the Year Ended December 31, 2016 |  |  |  |  |  |  |  |  |
Consolidated Statement of Earnings | $ | 62,346 |  |  | $ | 58,728 |  |  | $ | 293 |  |  | $ | (149 | ) |  |
Effective amounts recognized in earnings |  |  |  |  |  |  |  |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |  |  |
Foreign Currency Contracts | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (18 | ) |  |
Interest Rate Contracts | — |  |  | — |  |  | (2 | ) |  | — |  |  |
Commodity Contracts | (35 | ) |  | (82 | ) |  | — |  |  | — |  |  |
Ineffective amounts recognized in earnings |  |  |  |  |  |  |  |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |  |  |
Commodity Contracts | (5 | ) |  | 6 |  |  | — |  |  | — |  |  |
Total gain (loss) recognized in earnings | $ | (40 | ) |  | $ | (76 | ) |  | $ | (2 | ) |  | $ | (18 | ) |  | $ | (136 | )
In 2017, the Company adopted the amended guidance of ASC 815, Derivatives and Hedging. As a result, gains or losses related to highly-effective hedging relationships are now deferred in AOCI until the hedged item impacts earnings. Prior to 2017, gain or loss on the derivative instrument that was in excess of the cumulative change in the cash flows of the hedged item, if any (i.e., the ineffective portion) were recognized in the consolidated statement of earnings during the current period. Net Investment Hedging Strategies In June 2015, the Company issued €500 million aggregate principal amount of Floating Rate Notes and €600 million aggregate principal amount of 1.75% Notes. The Company designated the €1.1 billion as a hedge of its net investment in a foreign subsidiary. As of December 31, 2018, the Company had $26 million of after-tax losses in AOCI related to gains and losses from the net investment hedge transaction. The amount is deferred in AOCI until the underlying investment is divested. In July 2018, the Company entered into forward foreign exchange contracts and designated €500 million as a hedge of its net investment in a foreign subsidiary. As of December 31, 2018, the Company had $14 million of after-tax losses in AOCI related to gains and losses from the net investment hedge transaction. The amount is deferred in AOCI until the underlying investment is divested.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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