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DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Apr. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 11. Derivative Financial Instruments

The Company is exposed to various market risks, including changes in commodity prices (raw materials and finished goods). To manage risks associated with the volatility of these natural business exposures, the Company enters into commodity agreements and forward purchase (corn) and sale (ethanol, distillers grains and non-food grade corn oil) contracts. The Company does not purchase or sell derivative financial instruments for trading or speculative purposes. The Company does not purchase or sell derivative financial instruments for which a lack of marketplace quotations would require the use of fair value estimation techniques.

The following table provides information about the fair values of the Company’s derivative financial instruments (that are not accounted for under the “normal purchases and normal sales” scope exemption of ASC 815) and the line items on the Consolidated Condensed Balance Sheets in which the fair values are reflected (in thousands):

	Asset Derivatives Fair Value				Liability Derivatives Fair Value
	April 30, 2018		January 31, 2018		April 30, 2018		January 31, 2018

Commodity futures (1)	$	—	$	—	$	592	$	87
Forward purchase contracts (2)		378		72		436		34
Total	$	378	$	72	$	1,028	$	121

(1) Commodity futures are included in accrued expenses and other current liabilities. These contracts are short/sell positions for approximately 6.2 million and 2.5 million bushels of corn at April 30, 2018 and January 31, 2018, respectively.

(2) Forward purchase contracts assets are included in prepaid expenses and other current assets while forward purchase contracts liabilities are included in accrued expenses and other current liabilities. These contracts are for purchases of approximately 22.6 million and 11.7 million bushels of corn at April 30, 2018 and January 31, 2018, respectively.

As of April 30, 2018, all of the derivative financial instruments held by the Company were subject to enforceable master netting arrangements. The Company’s accounting policy is to offset positions amounts owed or owing with the same counterparty. As of April 30, 2018, the gross positions of the enforceable master netting agreements are not significantly different from the net positions presented in the table above. Depending on the amount of an unrealized loss on a derivative contract held by the Company, the counterparty may require collateral to secure the Company’s derivative contract position. As of April 30, 2018, the Company was required to maintain collateral in the amount of approximately $896,000 to secure the Company’s derivative position.

See Note 6 which contains fair value information related to derivative financial instruments.

Losses on the Company’s derivative financial instruments of approximately $565,000 for the first quarter of fiscal year 2018 were included in cost of sales on the Consolidated Condensed Statements of Operations. Gains on the Company’s derivative financial instruments of approximately $124,000 for the first quarter of fiscal year 2017 were included in cost of sales on the Consolidated Condensed Statements of Operations. Gains on the Company’s derivative financial instruments of approximately $44,000 for the first quarter of fiscal year 2018 were included in net sales and revenue on the Consolidated Condensed Statements of Operations.