XML 27 R13.htm IDEA: XBRL DOCUMENT
v3.24.1.u1

Derivative Instruments and Hedging Activities | 3 Months Ended
--- | ---
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | Derivative Instruments and 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 product 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 forward commodity purchase or sale contracts, and inventories of certain merchandisable agricultural products, which include amounts acquired under deferred pricing contracts, are stated at fair 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 March 31, 2024 and December 31, 2023.
| March 31, 2024 |  | December 31, 2023
| Assets |  | Liabilities |  | Assets |  | Liabilities
| (In millions)
Foreign Currency Contracts | $ | 145 |  |  | $ | 94 |  |  | $ | 187 |  |  | $ | 122 |
Commodity Contracts | 1,351 |  |  | 883 |  |  | 1,343 |  |  | 957 |
Total | $ | 1,496 |  |  | $ | 977 |  |  | $ | 1,530 |  |  | $ | 1,079 |
The following tables set 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 three months ended March 31, 2024 and 2023.
|  |  |  |  | Other (income) expense - net |  |  |  |
|  |  | Cost of |  |  | Interest |  |
(In millions) | Revenues |  | products sold |  |  | expense |  |
Three Months Ended March 31, 2024 |  |  |  |  |  |  |  |  |
Consolidated Statement of Earnings | $ | 21,847 |  |  | $ | 20,188 |  |  | $ | (26) |  |  | $ | 166 |  |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |  |  |
Foreign Currency Contracts | $ | 1 |  |  | $ | (63) |  |  | $ | 54 |  |  | $ | — |  |  |
Commodity Contracts | — |  |  | 197 |  |  | — |  |  | — |  |  |
Total gain (loss) recognized in earnings | $ | 1 |  |  | $ | 134 |  |  | $ | 54 |  |  | $ | — |  |  | $ | 189 |
Three Months Ended March 31, 2023 |  |  |  |  |  |  |  |  |
Consolidated Statement of Earnings | $ | 24,072 |  |  | $ | 21,992 |  |  | $ | (44) |  |  | $ | 147 |  |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |  |  |
Foreign Currency Contracts | $ | (11) |  |  | $ | 95 |  |  | $ | (16) |  |  | $ | — |  |  |
Commodity Contracts | — |  |  | 440 |  |  | — |  |  | — |  |  |
Debt Conversion Option | — |  |  | — |  |  | — |  |  | 5 |  |  |
Total gain (loss) recognized in earnings | $ | (11) |  |  | $ | 535 |  |  | $ | (16) |  |  | $ | 5 |  |  | $ | 513 |
Changes in the market value of inventories of certain merchandisable agricultural commodities, inventory-related payables, 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. Changes in the fair value of foreign currency-related derivatives are recognized in the consolidated statements of earnings as a component of revenues, cost of products sold, and other (income) expense - net depending on the purpose of the contract. Derivatives Designated as Cash Flow and Net Investment Hedging Strategies The Company had certain derivatives designated as cash flow and net investment hedges as of March 31, 2024 and December 31, 2023. For derivative instruments that are designated and qualify as highly-effective cash flow hedges (i.e., hedging the exposure to variability in expected future cash flow that is attributable to a particular risk), the gain or loss on the derivative instrument is reported as a component of AOCI and as an operating activity in the statement of cash flows, and is reclassified into earnings in the same line item affected by the hedged transaction in the same period or periods during which the hedged transaction affects earnings. Hedge components excluded from the assessment of effectiveness and gains and losses related to discontinued hedges are recognized in the consolidated statement of earnings during the current period. Commodity Contracts For each of the hedge programs described below, the derivatives are designated as cash flow hedges. 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 and losses arising from the hedge are reclassified from AOCI to either revenues or cost of products sold, as applicable. 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 normally grind approximately 59 million bushels of corn per month. During the past 12 months, the Company hedged between 12% and 34% of its monthly grind. At March 31, 2024, the Company had designated hedges representing between 0% and 29% of its anticipated monthly grind of corn for the next 12 months. The Company uses futures and options contracts to hedge the purchase price of the anticipated volumes of soybeans to be purchased and processed in a future month for certain of its U.S. soybean crush facilities, subject to certain program limits. 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, subject to certain program limits. During the past 12 months, the Company hedged between 77% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities. At March 31, 2024, the Company had designated hedges representing between 3% 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 Company uses futures and OTC swaps to hedge the purchase price of anticipated volumes of natural gas consumption in a future month for certain of its facilities in North America and Europe, subject to certain program limits. During the past 12 months, the Company hedged between 39% and 80% of the anticipated monthly natural gas consumption at the designated facilities. At March 31, 2024, the Company had designated hedges representing between 34% and 70% of the anticipated monthly natural gas consumption over the next 12 months. As of March 31, 2024 and December 31, 2023, the Company had after-tax losses of $9 million and after-tax gains of $42 million in AOCI, respectively, related to gains and losses from these programs. The Company expects to recognize $9 million of the March 31, 2024 after-tax losses in its consolidated statement of earnings during the next 12 months. Foreign Currency Contracts The Company uses cross-currency swaps and foreign exchange forwards designated as net investment hedges to protect the Company’s investment in a foreign subsidiary against changes in foreign currency exchange rates. The Company executed USD-fixed to Euro-fixed cross-currency swaps with an aggregate notional amount of $0.8 billion as of March 31, 2024 and December 31, 2023, and foreign exchange forwards with an aggregate notional amount of $2.1 billion as of March 31, 2024 and December 31, 2023. As of March 31, 2024 and December 31, 2023, the Company had after-tax gains of $46 million and after-tax losses of $5 million in AOCI, respectively, related to foreign exchange gains and losses from net investment hedge transactions. The amount is deferred in AOCI until the underlying investment is divested. The following table sets forth the fair value of derivatives designated as hedging instruments as of March 31, 2024 and December 31, 2023.
| March 31, 2024 |  | December 31, 2023
| Assets |  | Liabilities |  | Assets |  | Liabilities
| (In millions)
Commodity Contracts | $ | 11 |  |  | $ | — |  |  | $ | 16 |  |  | $ | — |
Foreign Currency Contracts | 42 |  |  | — |  |  | — |  |  | 22 |
Total | $ | 53 |  |  | $ | — |  |  | $ | 16 |  |  | $ | 22 |
The following table sets forth the pre-tax gains (losses) on derivatives designated as hedging instruments that have been included in the consolidated statements of earnings for the three months ended March 31, 2024 and 2023.
|  |  | Cost of products sold |  |  |  |  |  |  |  |  |  |
(In millions) |  |  |  |  |  |  |  |
Three Months Ended March 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated Statement of Earnings |  |  | $ | 20,188 |  |  |  |  |  |  |  |  |  |  |
Effective amounts recognized in earnings |  |  |  |  |  |  |  |  |  |  |  |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity Contracts |  |  | $ | 19 |  |  |  |  |  |  |  |  |  |  |
Total gain (loss) recognized in earnings |  |  | $ | 19 |  |  |  |  |  |  |  |  |  |  | $ | 19 |
Three Months Ended March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated Statement of Earnings |  |  | $ | 21,992 |  |  |  |  |  |  |  |  |  |  |
Effective amounts recognized in earnings |  |  |  |  |  |  |  |  |  |  |  |  |
Pre-tax gains (losses) on: |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity Contracts |  |  | $ | (104) |  |  |  |  |  |  |  |  |  |  |
Total gain (loss) recognized in earnings |  |  | $ | (104) |  |  |  |  |  |  |  |  |  |  | $ | (104) |
Other Net Investment Hedging Strategies The Company has designated €0.7 billion of its outstanding long-term debt and commercial paper borrowings at March 31, 2024 and December 31, 2023 as hedges of its net investment in a foreign subsidiary. As of March 31, 2024 and December 31, 2023, the Company had after-tax gains of $224 million and $212 million in AOCI, respectively, related to foreign exchange gains and losses from the net investment hedge transactions. The amount is deferred in AOCI until the underlying investment is divested.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration