XML 44 R15.htm IDEA: XBRL DOCUMENT v3.25.1

Derivative Financial Instruments and Hedging Activities

6 Months Ended

Feb. 28, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments and Hedging Activities Disclosure

Derivative Financial Instruments and Hedging Activities

    We enter into various derivative instruments to manage our exposure to movements primarily associated with agricultural and energy commodity prices and, to a lesser degree, foreign currency exchange rates and interest rates. Except for certain cash-settled swaps related to future crude oil purchases and refined product sales, which are accounted for as cash flow hedges, our derivative instruments represent economic hedges of price risk for which hedge accounting under ASC Topic 815 is not applied. Rather, the derivative instruments are recorded on our Condensed Consolidated Balance Sheets at fair value with changes in fair value being recorded directly to earnings, primarily within cost of goods sold in our Condensed Consolidated Statements of Operations. See Note 12, Fair Value Measurements, for additional information. The majority of our exchange-traded agricultural commodity futures are settled daily through CHS Hedging, LLC, our wholly-owned FCM.

Derivatives Not Designated as Hedging Instruments

The following tables present the gross fair values of derivative assets, derivative liabilities and related margin deposits (cash collateral) recorded on our Condensed Consolidated Balance Sheets, along with related amounts permitted to be offset in accordance with U.S. GAAP. Although we have certain netting arrangements for our exchange-traded futures and options contracts and certain over-the-counter ("OTC") contracts, we have elected to report our derivative instruments on a gross basis on our Condensed Consolidated Balance Sheets under ASC Topic 210-20, Balance Sheet-Offsetting.

			February 28, 2025
									Amounts Not Offset on Condensed Consolidated Balance Sheet but Eligible for Offsetting
			Gross Amount Recognized						Cash Collateral						Derivative Instruments						Net Amount
Derivative assets			(Dollars in thousands)
Commodity derivatives			$	170,511					$	—					$	750					$	169,761
Foreign exchange derivatives			19,978						—						16,138						3,840
Total			$	190,489					$	—					$	16,888					$	173,601
Derivative liabilities
Commodity derivatives			$	177,591					$	550					$	750					$	176,291
Foreign exchange derivatives			30,731						—						16,138						14,593
Total			$	208,322					$	550					$	16,888					$	190,884

			August 31, 2024
									Amounts Not Offset on Condensed Consolidated Balance Sheet but Eligible for Offsetting
			Gross Amount Recognized						Cash Collateral						Derivative Instruments						Net Amount
Derivative assets			(Dollars in thousands)
Commodity derivatives			$	165,709					$	—					$	2,522					$	163,187
Foreign exchange derivatives			9,029						—						7,100						1,929
Total			$	174,738					$	—					$	9,622					$	165,116
Derivative liabilities
Commodity derivatives			$	221,803					$	1,601					$	2,522					$	217,680
Foreign exchange derivatives			24,476						—						7,100						17,376
Total			$	246,279					$	1,601					$	9,622					$	235,056

    Derivative assets and liabilities with maturities of less than 12 months are recorded in other current assets and other current liabilities, respectively, on our Condensed Consolidated Balance Sheets. Derivative assets and liabilities with maturities greater than 12 months are recorded in other assets and other liabilities, respectively, on our Condensed Consolidated Balance Sheets. The amount of long-term derivative assets recorded on our Condensed Consolidated Balance Sheets as of February 28, 2025, and August 31, 2024, was $3.1 million and $2.9 million, respectively. The amount of long-term derivative liabilities recorded on our Condensed Consolidated Balance Sheets as of February 28, 2025, and August 31, 2024, was $1.4 million and $6.0 million, respectively.

    The following table sets forth the pretax gains (losses) on derivatives not accounted for as hedging instruments that have been included in our Condensed Consolidated Statements of Operations for the three and six months ended February 28, 2025, and February 29, 2024:

									Three Months Ended												Six Months Ended
			Location of Gain (Loss)						February 28, 2025						February 29, 2024						February 28, 2025						February 29, 2024
									(Dollars in thousands)
Commodity derivatives			Cost of goods sold						$	(22,912)					$	30,703					$	49,544					$	38,887
Foreign exchange derivatives			Cost of goods sold						12,851						(1,001)						4,010						(5,608)
Foreign exchange derivatives			Marketing, general and administrative expenses						2,191						(849)						(68)						(29)
Total									$	(7,870)					$	28,853					$	53,486					$	33,250

Commodity Contracts

    As of February 28, 2025, and August 31, 2024, we had outstanding commodity futures and options contracts that were used as economic hedges, as well as fixed-price forward contracts related to physical purchases and sales of commodities. The table below presents the notional volumes for all outstanding commodity contracts:

			February 28, 2025												August 31, 2024
			Long						Short						Long						Short
			(Units in thousands)
Grain and oilseed (bushels)			514,479						960,135						385,426						517,883
Energy products (barrels)			5,757						6,389						8,438						5,014
Processed grain and oilseed (tons)			838						2,173						3,600						6,193
Crop nutrients (tons)			8						42						73						14
Natural gas (metric million Btu)			—						—						2,350						500

Foreign Exchange Contracts

    We conduct a substantial portion of our business in U.S. dollars, but we are exposed to risks relating to foreign currency fluctuations, primarily due to global grain marketing transactions in South America, the Asia Pacific region and Europe and purchases of products from Canada. We use foreign currency derivative instruments to mitigate the impact of exchange rate fluctuations. Although CHS has some risk exposure relating to foreign currency transactions, a larger impact with exchange rate fluctuations is the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of U.S. agricultural products compared to the same products offered by alternative sources of world supply. The notional amount of our foreign exchange derivative contracts was $1.7 billion and $1.5 billion as of February 28, 2025, and August 31, 2024, respectively.

Derivatives Designated as Cash Flow Hedging Strategies

    Certain pay-fixed, receive-variable, cash-settled swaps are designated as cash flow hedges of future crude oil purchases in our Energy segment. We also designate certain pay-variable, receive-fixed, cash-settled swaps as cash flow hedges of future refined energy product sales. These hedging instruments and the related hedged items are exposed to significant market price risk and potential volatility. As part of our risk management strategy, we look to hedge a portion of our expected future crude oil needs and the resulting refined product output based on prevailing futures prices, management's expectations about future commodity price changes and our risk appetite. We may also elect to dedesignate certain derivative instruments previously designated as cash flow hedges as part of our risk management strategy. Amounts recorded in other comprehensive income for these dedesignated derivative instruments remain in other comprehensive income and are recognized in earnings in the period in which the underlying transactions affect earnings. The aggregate notional amounts of cash flow hedges were 5.5 million as of February 28, 2025, and August 31, 2024, respectively.

    The following table presents the fair value of our commodity derivative instruments designated as cash flow hedges and the locations on our Condensed Consolidated Balance Sheets in which they are recorded:

						Derivative Assets																		Derivative Liabilities
Balance Sheet Location						February 28, 2025						August 31, 2024						Balance Sheet Location						February 28, 2025						August 31, 2024
						(Dollars in thousands)																		(Dollars in thousands)
Other current assets						$	5,438					$	5,226					Other current liabilities						$	1,164					$	2,781

    The following table presents the pretax gains recorded in other comprehensive income relating to cash flow hedges for the three and six months ended February 28, 2025, and February 29, 2024:

						Three Months Ended												Six Months Ended
						February 28, 2025						February 29, 2024						February 28, 2025						February 29, 2024
						(Dollars in thousands)
Commodity derivatives						$	6					$	7,932					$	1,829					$	1,622

    The following table presents the pretax gains relating to our existing cash flow hedges that were reclassified from accumulated other comprehensive loss into our Condensed Consolidated Statements of Operations for the three and six months ended February 28, 2025, and February 29, 2024:

									Three Months Ended												Six Months Ended
			Location of Gain						February 28, 2025						February 29, 2024						February 28, 2025						February 29, 2024
									(Dollars in thousands)
Commodity derivatives			Cost of goods sold						$	3,568					$	2,585					$	8,097					$	10,667

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