XML 22 R9.htm IDEA: XBRL DOCUMENT v2.4.0.8
Note 3 - Derivative Instruments
 3 Months Ended
Mar. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

3)             Derivative instruments


FutureFuel is exposed to certain risks relating to its ongoing business operations.  Commodity price risk is the primary risk managed by using derivative instruments.  Regulated fixed price futures and option contracts are utilized to manage the price risk associated with future purchases of feedstock used in FutureFuel’s biodiesel production along with physical feedstock and finished product inventories attributed to this process.


FutureFuel recognizes all derivative instruments as either assets or liabilities at fair value in its consolidated balance sheet.  FutureFuel’s derivative instruments do not qualify for hedge accounting under the specific guidelines of ASC 815-20-25, Derivatives and Hedging, Hedging-General, Recognition.  While management believes these instruments are entered into in order to effectively manage various risks, none of the derivative instruments are designated and accounted for as hedges primarily as a result of the extensive record keeping requirements.


The fair value of FutureFuel’s derivative instruments is determined based on the closing prices of the derivative instruments on relevant commodity exchanges at the end of an accounting period.  Changes in fair value of the derivative instruments are recorded in the statement of operations as a component of cost of goods sold, and amounted to a loss of $62 and a gain of $1,339 for the three months ended March 31, 2014 and 2013, respectively.


The volumes and carrying values of FutureFuel’s derivative instruments were as follows at:


   

Asset/(Liability)

 
   

March 31, 2014

   

December 31, 2013

 
   

Quantity

(Contracts) Long/

(Short)

   

Fair Value

   

Quantity

(Contracts) Long/

(Short)

   

Fair Value

 

Regulated options, included in other current assets

    (400

)

  $ (703

)

    (50

)

  $ (328

)

Regulated fixed price future commitments, included in other current assets

    42     $ (30

)

    4     $ -  

The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $1,914 and $479 at March 31, 2014 and December 31, 2013, respectively. The carrying values of the margin account and of the derivative instruments are included, net, in other current assets.