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DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Jan. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

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 changes in fair value of these derivative financial instruments are recognized in current period earnings as the Company does not use hedge accounting.

The following table provides information about the fair values of the Company’s derivative financial instruments and the line items on the Consolidated Balance Sheets in which the fair values are reflected (in thousands):

	Asset Derivatives				Liability Derivatives
	Fair Value at January 31,				Fair Value at January 31,
	2020		2019		2020		2019

Commodity futures (1)	$	352	$	44	$	—	$	—
Forward purchase contracts (2)	$	—	$	—	$	230	$	22

(1)

Commodity futures assets are included in prepaid expenses and other. These contracts are short/sell positions for approximately 3.7 million bushels of corn and long/buy positions for approximately 2.2 million bushels of corn at January 31, 2020. These contracts are short/sell positions for approximately 2.0 million bushels of corn at January 31, 2019.

(2)

Forward purchase contracts liabilities are included in accrued expenses and other current liabilities while forward purchase contracts assets are included in prepaid expenses and other. These contracts are for purchases of approximately 1.6 million bushels of corn at January 31, 2020 and 1.3 million bushels of corn at January 31, 2019.

As of January 31, 2020, and 2019, 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 owed or owing with the same counterparty. As of January 31, 2020 and 2019, 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 January 31, 2020, the Company was required to maintain collateral with the counterparty in the amount of approximately $1,113,000 to secure the Company’s derivative liability position. See Note 4 which contains fair value information related to derivative financial instruments.

The Company recognized gains (included in cost of sales) on derivative financial instruments of approximately $2,201,000, $2,698,000 and $1,317,000 in fiscal years 2019, 2018 and 2017, respectively.