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Note 5 - Derivative Instruments | 9 Months Ended
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Sep. 30, 2025
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
5) | DERIVATIVE INSTRUMENTS
The Company records all derivative instruments at fair value. Fair value is determined by using the closing prices of the derivative instruments on the New York Mercantile Exchange at the end of an accounting period. Changes in the fair value of derivative instruments are recognized at the end of each accounting period and recorded in the statements of operations as a component of cost of goods sold. These instruments use inputs considered Level 1 holdings. Fair value accounting pronouncements include a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of FutureFuel. Unobservable inputs are inputs that reflect FutureFuel’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. In order to manage commodity price risk caused by market fluctuations in feedstock and biofuel prices, future purchases of feedstock used in biodiesel production, physical feedstock, finished product inventories attributed to the process, and other petroleum products purchased or sold, the Company may enter into exchange-traded commodity futures and options contracts. The Company accounts for these derivative instruments in accordance with ASC Topic 815-20-25, “Derivatives and Hedging”, (“ASC 815”). Under this standard, the accounting for changes in the fair value of a derivative instrument depends upon whether it has been designated as an accounting hedging relationship and, further, on the type of hedging relationship. To qualify for designation as an accounting hedging relationship, specific criteria must be met and appropriate documentation maintained. The Company had no derivative instruments that qualified under these rules as designated accounting hedges in 2025 or 2024. The Company has elected the normal purchase and normal sales exception for certain feedstock purchase contracts and supply agreements. Total gains and losses on derivative instruments and changes in fair value of the derivative instruments are recorded in the consolidated statements of operations as a component of cost of goods sold and amounted to a net gain of $171 (including settlements of $48) and a net gain of $621 (including settlements of $217) for the three and nine months ended September 30, 2025, respectively, and a net gain of $1,947 (including settlements of $1,691) and a net loss of $102 (including settlement gains of $1,337) for the three and nine months ended September 30, 2024, respectively. The volumes and carrying values of FutureFuel’s derivative instruments were as follows at:
|  | Asset (Liability) |
|  | September 30, 2025 |  |  | December 31, 2024 |
|  | Contract Quantity |  |  | Fair Value |  |  | Contract Quantity |  |  | Fair Value |
Regulated fixed price future commitments, included in other current assets (in thousand barrels) |  |  | 324 |  |  | $ | 169 |  |  |  | 100 |  |  | $ | (235 | )
The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $517 and $877 at September 30, 2025 and December 31, 2024, respectively, and was classified as other current assets in the consolidated balance sheets. The carrying values of the margin account and of the derivative instruments are included net in other current assets.

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