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Derivative Financial Instruments and Hedging Activities
 6 Months Ended
Feb. 28, 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 hedges. Derivative instruments are recorded on our Consolidated Balance Sheets at fair values 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 February 28, 2014, August 31, 2013 and February 28, 2013, we had the following outstanding purchase and sales contracts:
 
February 28, 2014
 
August 31, 2013
 
February 28, 2013
 
Purchase
Contracts
 
Sales
Contracts
 
Purchase
Contracts
 
Sales
Contracts
 
Purchase
Contracts
 
Sales
Contracts
 
(Units in thousands)
Grain and oilseed - bushels
651,998
 
1,009,946
 
521,979
 
806,295
 
605,309
 
906,758
Energy products - barrels
29,067
 
32,897
 
12,626
 
21,312
 
12,103
 
21,575
Soy products - tons
16
 
784
 
24
 
847
 
32
 
333
Crop nutrients - tons
2,067
 
2,535
 
968
 
1,050
 
1,553
 
2,128
Ocean and barge freight - metric tons
1,520
 
234
 
1,225
 
151
 
933
 
125
Rail freight - rail cars
298
 
157
 
220
 
43
 
153
 
41
Livestock - pounds

 
10,800
 

 
17,280
 
2,920
 
2,520


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 ASC 210-10 or when the instruments are subject to master netting arrangements under ASC 815-10-45.

 
February 28, 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
$
615,178

 

 
$
53,153

 
$
562,025

Foreign exchange derivatives
6,345

 

 
1,941

 
4,404

Total Derivative Assets
$
621,523

 

 
$
55,094

 
$
566,429

Derivative Liabilities:
 
 
 
 
 
 
 
Commodity and freight derivatives
$
550,870

 
$
26,329

 
$
53,152

 
$
471,389

Foreign exchange derivatives
2,629

 

 
1,941

 
688

Interest rate derivatives - non-hedge
194

 

 

 
194

Total Derivative Liabilities
$
553,693

 
$
26,329

 
$
55,093

 
$
472,271



 
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



 
February 28, 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
$
485,222

 
$
12,555

 
$
45,653

 
$
427,014

Foreign exchange derivatives
15,497

 

 

 
15,497

Interest rate derivatives - hedge
459

 
 
 
 
 
459

Total Derivative Assets
$
501,178

 
$
12,555

 
$
45,653

 
$
442,970

Derivative Liabilities:
 
 
 
 
 
 
 
Commodity and freight derivatives
$
428,866

 
$
8,867

 
$
45,653

 
$
374,346

Foreign exchange derivatives
691

 

 

 
691

Interest rate derivatives - non-hedge
418

 

 

 
418

Total Derivative Liabilities
$
429,975

 
$
8,867

 
$
45,653

 
$
375,455



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 three and six months ended February 28, 2014. As of February 28, 2014, August 31, 2013 and February 28, 2013, the unrealized gains deferred to accumulated other comprehensive loss were as follows:
 
February 28, 2014
 
August 31, 2013
 
February 28, 2013
 
(Dollars in thousands)
Unrealized gains (losses) included in accumulated other comprehensive loss, net of tax expense of $9.2 million and $0.2 million, respectively

 
$
14,930

 
$
284



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 six months ended February 28, 2014 and 2013.
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
Location of
Gain (Loss)
 
February 28, 2014
 
February 28, 2013
 
February 28, 2014
 
February 28, 2013
 
 
 
(Dollars in thousands)
Commodity and freight derivatives
Cost of goods sold
 
$
81,210

 
$
(102,006
)
 
$
61,421

 
$
(430,290
)
Foreign exchange derivatives
Cost of goods sold
 
(1,581
)
 
17,903

 
(2,003
)
 
16,218

Interest rate derivatives
Interest, net
 
52

 
64

 
51

 
126

Total
 
 
$
79,681

 
$
(84,039
)
 
$
59,469

 
$
(413,946
)