v3.25.2
Risk Management Activities
 3 Months Ended
Aug. 24, 2025
Risk Management Activities [Abstract]  
Risk Management Activities
 
(6) Risk Management Activities
 
Many commodities we
 
use in the
 
production and distribution
 
of our products
 
are exposed to
 
market price risks.
We
utilize derivatives
to manage price risk for our principal
 
ingredients and energy costs, including
 
grains (oats, wheat, and corn), oils
 
(principally soybean),
dairy products, natural
 
gas, and diesel fuel.
 
Our primary objective
 
when entering into
 
these derivative contracts
 
is to achieve
 
certainty
with
 
regard
 
to
 
the
 
future
 
price
 
of
 
commodities
 
purchased
 
for
 
use
 
in
 
our
 
supply
 
chain.
We
manage
 
our
 
exposures
 
through
 
a
combination of purchase orders, long-term
 
contracts with suppliers, exchange-traded
 
futures and options, and over-the-counter
 
options
and swaps.
We
offset
 
our exposures
 
based on
 
current and
 
projected market
 
conditions and
 
generally seek
 
to acquire
 
the inputs
 
at as
close as possible to or below our planned cost.
We
 
use derivatives
 
to manage
 
our exposure
 
to changes
 
in commodity
 
prices. We
 
do not
 
perform the
 
assessments required
 
to achieve
hedge accounting for
 
commodity derivative positions.
 
Accordingly,
 
the changes in
 
the values of
 
these derivatives are
 
recorded in
 
cost
of sales in our Consolidated Statements of Earnings.
Although we do
 
not meet the
 
criteria for
 
cash flow hedge
 
accounting, we believe
 
that these instruments
 
are effective
 
in achieving our
objective of providing certainty
 
in the future price of commodities purchased
 
for use in our supply chain.
 
Accordingly, for
 
purposes of
measuring
 
segment
 
operating
 
performance,
 
these
 
gains
 
and
 
losses
 
are
 
reported
 
in
 
unallocated
 
corporate
 
items
 
outside
 
of
 
segment
operating results
 
until such time
 
that the exposure
 
we are managing
 
affects earnings.
 
At that time,
 
we reclassify
 
the gain or
 
loss from
unallocated
 
corporate
 
items
 
to
 
segment
 
operating
 
profit,
 
allowing
 
our
 
operating
 
segments
 
to
 
realize
 
the
 
economic
 
effects
 
of
 
the
derivative without experiencing any resulting mark-to-market volatility,
 
which remains in unallocated corporate items.
 
Unallocated corporate items for the quarters ended August 24, 2025, and
 
August 25, 2024, included:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
In Millions
Aug. 24, 2025
Aug. 25, 2024
Net loss on mark-to-market valuation of certain
 
 
commodity positions
$
(0.5)
$
(37.7)
Net (gain) loss on commodity positions reclassified from
 
 
unallocated corporate items to segment operating profit
(1.4)
17.2
Net mark-to-market revaluation of certain grain inventories
(6.6)
(8.3)
Net mark-to-market valuation of certain commodity
 
 
positions recognized in unallocated corporate items
$
(8.5)
$
(28.8)
 
As
 
of
 
August
 
24,
 
2025,
 
the
 
net
 
notional
 
value
 
of
 
commodity
 
derivatives
 
was
 
$
139.2
 
million,
 
of
 
which
 
$
70.3
 
million
 
related
 
to
agricultural inputs and
 
$
68.9
 
million related to
 
energy inputs. These
 
contracts relate to
 
inputs that generally
 
will be utilized
 
within the
next
12
 
months.
We
 
also have
 
net investments
 
in foreign
 
subsidiaries that
 
are denominated
 
in euros.
 
As of
 
August 24,
 
2025, we
 
hedged a
 
portion of
these investments with €
4,743.7
 
million of euro-denominated bonds.
The
 
fair
 
values
 
of
 
the
 
derivative
 
positions
 
used
 
in
 
our
 
risk
 
management
 
activities
 
and
 
other
 
assets
 
recorded
 
at
 
fair
 
value
 
were
 
not
material as of
 
August 24, 2025,
 
and were Level
 
1 or Level
 
2 assets and
 
liabilities in the
 
fair value
 
hierarchy.
 
We
 
did not significantly
change our valuation techniques from prior periods.
 
We
 
offer
 
certain
 
suppliers
 
access
 
to
 
third-party
 
services
 
that
 
allow
 
them
 
to
 
view
 
our
 
scheduled
 
payments
 
online.
 
The
 
third-party
services also
 
allow suppliers
 
to finance
 
advances on
 
our scheduled
 
payments at
 
the sole
 
discretion of
 
the supplier
 
and the third
 
party.
We
 
have no
 
economic interest
 
in these
 
financing arrangements
 
and no
 
direct relationship
 
with the
 
suppliers, the
 
third parties,
 
or any
financial institutions
 
concerning these
 
services, including
 
not providing
 
any form
 
of guarantee
 
and not
 
pledging assets
 
as security
 
to
the third
 
parties or
 
financial institutions.
 
All of
 
our accounts
 
payable remain
 
as obligations
 
to our
 
suppliers as
 
stated in
 
our supplier
agreements. As
 
of August
 
24, 2025,
 
$
1,332.2
 
million of
 
our total
accounts payable
 
were payable
 
to suppliers
 
who utilize
 
these third-
party services.
 
As of
 
May 25,
 
2025, $
1,427.5
 
million of
 
our total
accounts payable
 
were payable
 
to suppliers
 
who utilize
 
these third-
party services.