##### Table of Contents





UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934for the quarterly period ended
    November 30, 2009.oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934for the transition period from
    
    to
    
    .   Commission File
    Number: 0-50150
  CHS Inc.
 (Exact name of registrant as
    specified in its charter)
  Minnesota(State or other jurisdiction
    of
    incorporation or organization)

41-0251095(I.R.S. Employer
    Identification Number)5500 Cenex Drive
    Inver Grove Heights, MN 55077(Address of principal
    executive offices, 
    including zip code)

(651) 355-6000(Registrants telephone
    number,
    including area
    code)   þ o
  Regulation S-T o o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ
    Number of shares outstanding atClass

January 11, 2010NONE

NONE




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##### 





INDEX
   
 Page No.PART I. FINANCIAL INFORMATIONItem 1.

Financial Statements (unaudited)


3Consolidated Balance Sheets as of
    November 30, 2009, August 31, 2009 and
    November 30, 2008


3Consolidated Statements of Operations for the
    three months ended November 30, 2009 and 2008


4Consolidated Statements of Cash Flows for the
    three months ended November 30, 2009 and 2008


5Notes to Consolidated Financial Statements


6Item 2.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


17Item 3.

Quantitative and Qualitative Disclosures about
    Market Risk


32Item 4T.

Controls and Procedures


32PART II. OTHER INFORMATIONItem 1A.

Risk Factors


33Item 6.

Exhibits


33SIGNATURE PAGE


34EX-10.2EX-31.1EX-31.2EX-32.1EX-32.2   1




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PART I.
    FINANCIAL INFORMATION  SAFE HARBOR STATEMENT UNDER THE PRIVATE
 SECURITIES LITIGATION REFORM ACT OF 1995
  Form 10-Q Form 10-Q
 2




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##### Table of Contents



Item 1.
    Financial
    Statements  CHS INC.
    AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
 (Unaudited)
  November 30,


August 31,


November 30,2009


2009


2008(dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
753,547


$
772,599


$
783,408Receivables


2,062,518



1,827,749



1,913,157Inventories


1,859,487



1,526,280



2,054,106Derivative assets


133,885



171,340



381,696Other current assets


447,417



447,655



762,238Total current assets


5,256,854



4,745,623



5,894,605Investments


697,912



727,925



721,499Property, plant and equipment


2,124,823



2,099,325



1,970,357Other assets


297,748



296,972



251,264Total assets

$
8,377,337


$
7,869,845


$
8,837,725LIABILITIES AND EQUITIESCurrent liabilities:Notes payable

$
261,680


$
246,872


$
356,877Current portion of long-term debt


108,232



83,492



105,905Customer credit balances


103,075



274,343



303,904Customer advance payments


490,757



320,688



562,089Checks and drafts outstanding


132,856



86,845



107,974Accounts payable


1,681,518



1,289,139



1,512,427Derivative liabilities


262,167



306,116



501,436Accrued expenses


270,982



308,720



291,908Dividends and equities payable


246,152



203,056



374,220Total current liabilities


3,557,419



3,119,271



4,116,740Long-term debt


953,143



988,461



1,062,472Other liabilities


460,570



428,949



414,637Commitments and contingenciesEquities:Equity certificates


2,203,029



2,214,824



2,023,733Preferred stock


282,694



282,694



232,751Accumulated other comprehensive loss


(155,967
)


(156,270
)


(87,071
)Capital reserves


831,000



749,054



848,501Total CHS Inc. equities


3,160,756



3,090,302



3,017,914Noncontrolling interests


245,449



242,862



225,962Total equities


3,406,205



3,333,164



3,243,876Total liabilities and equities

$
8,377,337


$
7,869,845


$
8,837,725    3




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
  For the Three Months EndedNovember 30,2009


2008(dollars in thousands)Revenues

$
6,195,241


$
7,733,919Cost of goods sold


5,992,580



7,413,412Gross profit


202,661



320,507Marketing, general and administrative


80,506



87,741Operating earnings


122,155



232,766Loss on investments






54,976Interest, net


16,212



20,175Equity income from investments


(32,166
)


(20,723
)Income before income taxes


138,109



178,338Income taxes


15,574



18,931Net income


122,535



159,407Net income attributable to noncontrolling interests


2,585



22,156Net income attributable to CHS Inc.

$
119,950


$
137,251    4




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
  For the Three Months EndedNovember 30,2009


2008(dollars in thousands)Cash flows from operating activities:Net income including noncontrolling interests

$
122,535


$
159,407Adjustments to reconcile net income to net cash (used in)
    provided by operating activities:Depreciation and amortization


49,962



47,671Amortization of deferred major repair costs


4,650



7,494Income from equity investments


(32,166
)


(20,723
)Distributions from equity investments


25,311



39,410Noncash patronage dividends received


(384
)


(393
)Gain on sale of property, plant and equipment


(1,565
)


(771
)Loss on investments






54,976Deferred taxes


18,978



672Other, net


1,274



(8,551
)Changes in operating assets and liabilities:Receivables


(243,944
)


675,390Inventories


(333,174
)


320,808Derivative assets


37,455



(12,193
)Other current assets and other assets


(232
)


(83,912
)Customer credit balances


(171,268
)


79,555Customer advance payments


170,069



(82,733
)Accounts payable and accrued expenses


356,040



(410,680
)Derivative liabilities


(43,949
)


227,845Other liabilities


11,833



4,013Net cash (used in) provided by operating activities


(28,575
)


997,285Cash flows from investing activities:Acquisition of property, plant and equipment


(71,999
)


(61,671
)Proceeds from disposition of property, plant and equipment


2,260



941Expenditures for major repairs


(5,797
)


(1
)Investments


(4,645
)


(89,889
)Investments redeemed


42,545



2,163Proceeds from sale of investments






16,109Changes in notes receivable


5,660



96,296Acquisition of intangibles






(1,320
)Business acquisitions, net of cash received






(40,199
)Other investing activities, net


87



506Net cash used in investing activities


(31,889
)


(77,065
)Cash flows from financing activities:Changes in notes payable


14,808



(137,346
)Principal payments on long-term debt


(10,578
)


(22,078
)Changes in checks and drafts outstanding


46,011



(97,621
)Distributions to noncontrolling interests


(1,037
)


(9,565
)Preferred stock dividends paid


(5,488
)


(4,524
)Retirements of equities


(2,304
)


(2,218
)Net cash provided by (used in) financing activities


41,412



(273,352
)Net (decrease) increase in cash and cash equivalents


(19,052
)


646,868Cash and cash equivalents at beginning of period


772,599



136,540Cash and cash equivalents at end of period

$
753,547


$
783,408    5




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 (dollars in thousands)
  Note 1.
    Accounting
    Policies  Basis
    of Presentation and Reclassifications
      Form 10-K,
  860-10-65-1, 860-10-65-1
  860-10-65-1
  Derivative
    Instruments and Hedging Activities
    over-the-counter
 6




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Purchase

SalesContracts

Contracts(units in thousands)Grain and oilseed  bushels


602,186



821,414Energy products  barrels


5,209



7,950Crop nutrients  tons


909



804Ocean and barge freight  metric tons


3,921



3,709     Gross FairValuesDerivative Assets:Commodity and freight derivatives

$
318,912Derivative Liabilities:Commodity and freight derivatives

$
442,881Interest rate derivatives


4,313$
447,194     Location of

Amount ofGain (Loss)

Gain (Loss)Commodity and freight derivatives

Cost of goods sold

$
5,897Interest rate derivatives

Interest, net


(645
)$
5,252   Goodwill
    and Other Intangible Assets
     7




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Subsequent
    Events
    Recent
    Accounting Pronouncements
    715-20-65-2, 715-20-65-2
    860-10-65-2, 860-10-65-2 860-10-65-2 860-10-65-2
 8




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   Note 2.
    Receivables  November 30,


August 31,


November 30,2009


2009


2008Trade accounts receivable

$
1,697,986


$
1,482,921


$
1,502,549Cofina Financial notes receivable


262,387



254,419



405,067Other


193,377



189,434



87,8022,153,750



1,926,774



1,995,418Less allowances and reserves


91,232



99,025



82,261$
2,062,518


$
1,827,749


$
1,913,157   Note 3.
    Inventories  November 30,


August 31,


November 30,2009


2009


2008Grain and oilseed

$
969,023


$
638,622


$
798,312Energy


478,639



496,114



504,123Crop nutrients


112,376



114,832



346,699Feed and farm supplies


227,950



198,440



359,946Processed grain and oilseed


61,986



69,344



37,707Other


9,513



8,928



7,319$
1,859,487


$
1,526,280


$
2,054,106   lower-of-cost lower-of-cost
    Note 4.
    Investments  50-50
 9




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
        available-for-sale
    For the Three Months EndedNovember 30,2009

2008Net sales

$
488,470


$
586,670Gross profit


68,916



41,136Net gain


29,473



10,651   November 30,

August 31,

November 30,2009

2009

2008Current assets

$
494,894


$
441,406


$
468,314Non-current assets


455,127



464,356



483,067Current liabilities


173,948



141,844



332,841Non-current liabilities


303,092



303,665



307,526  10




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   Note 5.
    Notes
    Payable  November 30,


August 31,


November 30,2009


2009


2008Notes payable

$
18,576


$
19,183


$
6,459Cofina Financial notes payable


243,104



227,689



350,418$
261,680


$
246,872


$
356,877     Note 6.
    Interest,
    net  For the Three Months EndedNovember 30,2009


2008Interest expense

$
18,279


$
22,388Capitalized interest


(1,524
)


(898
)Interest income


(543
)


(1,315
)Interest, net

$
16,212


$
20,175   Note 7.
    Equities    Fiscal 2010


Fiscal 2009CHS Inc. balances, September 1, 2009 and 2008

$
3,090,302


$
2,955,686Net income attributable to CHS Inc.


119,950



137,251Other comprehensive income (loss)


303



(19,029
)Equities retired


(2,304
)


(2,218
)Equity retirements accrued


2,304



2,218Equities issued in exchange for elevator properties


616Preferred stock dividends


(5,488
)


(4,524
)Preferred stock dividends accrued


3,659



3,016Accrued dividends and equities payable


(49,059
)


(54,416
)Other, net


473



(70
)CHS Inc. balances, November 30, 2009 and 2008

$
3,160,756


$
3,017,914Noncontrolling interests balances, September 1, 2009 and
    2008

$
242,862


$
205,732Net income attributable to noncontrolling interests


2,585



22,156Distributions to noncontrolling interests


(1,037
)


(9,565
)Distributions accrued


1,014



3,762Other


25



3,877Noncontrolling interests balances, November 30, 2009 and 2008

$
245,449


$
225,962  11




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CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   Note 8.
    Comprehensive
    Income    Note 9.
    Employee
    Benefit Plans    Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2009


2008


2009


2008


2009


2008Components of net periodic benefit costs for the three months
    ended November 30, 2009 and 2008:Service cost

$
5,206


$
4,061


$
308


$
296


$
330


$
278Interest cost


5,750



5,690



571



594



518



560Expected return on plan assets


(9,220
)


(7,588
)Prior service cost amortization


548



529



105



136



135



135Actuarial loss (gain) amortization


2,638



1,245



159



162



(12
)


(42
)Transition amount amortization


















51



51Net periodic benefit cost

$
4,922


$
3,937


$
1,143


$
1,188


$
1,022


$
982   Employer
    Contributions :
    Note 10.
    Segment
    Reporting       12




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
           13




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Ag





Corporate


ReconcilingEnergy


Business


Processing


and Other


Amounts


TotalFor the Three Months Ended November 30, 2009Revenues

$
2,264,580


$
3,742,631


$
264,099


$
10,474


$
(86,543
)

$
6,195,241Cost of goods sold


2,222,720



3,613,941



244,084



(1,622
)


(86,543
)


5,992,580Gross profit


41,860



128,690



20,015



12,096







202,661Marketing, general and administrative


27,890



38,191



5,549



8,876







80,506Operating earnings


13,970



90,499



14,466



3,220







122,155Interest, net


789



8,134



5,057



2,232







16,212Equity income from investments


(1,106
)


(9,315
)


(21,369
)


(376
)






(32,166
)Income before income taxes

$
14,287


$
91,680


$
30,778


$
1,364


$



$
138,109Intersegment revenues

$
(81,245
)

$
(4,316
)

$
(982
)





$
86,543


$
Goodwill

$
1,983


$
8,465






$
6,898






$
17,346Capital expenditures

$
46,353


$
22,252


$
1,614


$
1,780






$
71,999Depreciation and amortization

$
29,608


$
14,207


$
4,202


$
1,945






$
49,962Total identifiable assets at November 30, 2009

$
3,052,065


$
3,425,802


$
677,455


$
1,222,015






$
8,377,337For the Three Months Ended November 30, 2008Revenues

$
2,550,552


$
4,953,722


$
310,890


$
15,125


$
(96,370
)

$
7,733,919Cost of goods sold


2,328,652



4,889,570



292,582



(1,022
)


(96,370
)


7,413,412Gross profit


221,900



64,152



18,308



16,147







320,507Marketing, general and administrative


27,832



39,563



6,749



13,597







87,741Operating earnings


194,068



24,589



11,559



2,550







232,766(Gain) loss on investments


(15,748
)






70,724











54,976Interest, net


4,195



13,726



3,757



(1,503
)






20,175Equity income from investments


(1,236
)


(8,890
)


(10,230
)


(367
)






(20,723
)Income (loss) before income taxes

$
206,857


$
19,753


$
(52,692
)

$
4,420


$



$
178,338Intersegment revenues

$
(84,030
)

$
(11,781
)

$
(559
)





$
96,370


$
Goodwill

$
3,654


$
150






$
6,898






$
10,702Capital expenditures

$
41,742


$
16,975


$
2,123


$
831






$
61,671Depreciation and amortization

$
29,474


$
12,162


$
4,139


$
1,896






$
47,671Total identifiable assets at November 30, 2008

$
2,987,219


$
4,035,230


$
617,678


$
1,197,598






$
8,837,725  14




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   Note 11.
    Fair
    Value Measurements    Fair Value Measurements at November 30, 2009Quoted Prices in





SignificantActive Markets for


Significant Other


UnobservableIdentical Assets


Observable Inputs


Inputs(Level 1)


(Level 2)


(Level 3)


TotalAssets:Readily marketable inventories





$
1,031,009






$
1,031,009Commodity and freight derivatives

$
4,950



128,935







133,885Other assets


56,327











56,327Total Assets

$
61,277


$
1,159,944






$
1,221,221Liabilities:Commodity and freight derivatives

$
87,500


$
170,354






$
257,854Interest rate swap derivatives






4,313







4,313Total Liabilities

$
87,500


$
174,667






$
262,167   Readily marketable inventories 
  Commodity and freight derivatives  and/or
  Other assets  available-for-sale
  Interest rate swap derivatives 
 15




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Level 3Short-Term InvestmentsBalance, September 1, 2009

$
1,932Gains included in marketing, general and administrative expense


38Settlements


(1,970
)Balance, November 30, 2009

$
   Note 12.
    Commitments
    and Contingencies  Guarantees
   16




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  General
  Form 10-Q, Form 10-K, Form 10-Q.
    ®
         17




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##### Table of Contents



860-10-65-1, 860-10-65-1
  860-10-65-1
  Results
    of Operations
  Comparison
    of the three months ended November 30, 2009 and
    2008
  General.
   18




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##### Table of Contents



lower-of-cost
      Net Income attributable to CHS
    Inc.
  Revenues.
   19




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##### Table of Contents



20




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##### Table of Contents



Cost of Goods Sold.
      lower-of-cost lower-of-cost
   21




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##### Table of Contents



Marketing, General and
    Administrative.
  Loss (Gain) on Investments.
  Interest, net.
  Equity Income from Investments.
     22




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##### Table of Contents



Income Taxes.
  Noncontrolling Interests.
  Liquidity
    and Capital Resources
    364-day 364-day 364-day
    Cash
    Flows from Operations
   23




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##### Table of Contents



24




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##### Table of Contents



Cash
    Flows from Investing Activities
           25




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##### Table of Contents



Cash
    Flows from Financing Activities
  Working
    Capital Financing
  364-day
   26




---



##### Table of Contents



Cofina
    Financial Financing
  and/or
      Long-term
    Debt Financing
           27




---



##### Table of Contents



Form 10-K
    Other
    Financing
       28




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##### Table of Contents



Form S-1
    Off
    Balance Sheet Financing Arrangements
  Lease
    Commitments:
  Form 10-K
  Guarantees:
    Debt:
    Cofina
    Financial:
    Contractual
    Obligations
  Form 10-K
 29




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##### Table of Contents



Critical
    Accounting Policies
  Form 10-K
  Effect of
    Inflation and Foreign Currency Transactions
    Recent
    Accounting Pronouncements
    715-20-65-2, 715-20-65-2
    860-10-65-2, 860-10-65-2 860-10-65-2 860-10-65-2
 30




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##### Table of Contents



CAUTIONARY
    STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
    SECURITIES LITIGATION REFORM ACT
    Form 10-K
  
    Our revenues and operating results could be adversely affected
    by changes in commodity prices.
    Our operating results could be adversely affected if our members
    were to do business with others rather than with us.
    We participate in highly competitive business markets in which
    we may not be able to continue to compete successfully.
    Changes in federal income tax laws or in our tax status could
    increase our tax liability and reduce our net income.
    We incur significant costs in complying with applicable laws and
    regulations. Any failure to make the capital investments
    necessary to comply with these laws and regulations could expose
    us to financial liability.
    Regulations
    and/or
    proposed legislation governing green house gas (GHG) emissions
    could adversely affect our results and financial condition.
    Environmental liabilities could adversely affect our results and
    financial condition.
    Actual or perceived quality, safety or health risks associated
    with our products could subject us to liability and damage our
    business and reputation.
    Our operations are subject to business interruptions and
    casualty losses; we do not insure against all potential losses
    and could be seriously harmed by unexpected liabilities.
    Our cooperative structure limits our ability to access equity
    capital.
    Consolidation among the producers of products we purchase and
    customers for products we sell could adversely affect our
    revenues and operating results.
    If our customers choose alternatives to our refined petroleum
    products our revenues and profits may decline.
    Operating results from our agronomy business could be volatile
    and are dependent upon certain factors outside of our control. 31




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##### Table of Contents




    Technological improvements in agriculture could decrease the
    demand for our agronomy and energy products.
    We operate some of our business through joint ventures in which
    our rights to control business decisions are limited.  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Form 10-K
  Item 4T.
    Controls
    and Procedures  Rule 13a-15(e)
  Rule 13a-15(f)
 32




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##### Table of Contents



PART II.
    OTHER INFORMATION Item 1A.
    Risk
    Factors  Form 10-K
  Item 6.
    Exhibits  Exhibit

Description10
.1

Amendment No. 2 to Note Purchase Agreement
    (Series 2008-A)
    dated November 20, 2009, by and among Cofina Funding, LLC
    as the Issuer; Victory Receivables Corporation, as the Conduit
    Purchaser; and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York
    Branch, as the Funding Agent and as a Committed Purchaser
    (Incorporated by reference to our Registration Statement on
    Form S-1
    (File
    No. 333-163608),
    filed December 9, 2009)10
.2

Seventh Amendment to 2003 Amended and Restated Credit Agreement
    (2-Year
    Revolving Loan) dated December 16, 2009 by and among
    National Cooperative Refinery Association, CoBank, ACB and the
    Syndication Parties31
.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200231
.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200232
.1

Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 200232
.2

Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002  33




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##### Table of Contents



SIGNATURES    CHS Inc.
  John
    Schmitz
   Executive Vice President and
 Chief Financial Officer
   34