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8. Agreements

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Working Capital Arrangement. Pursuant to a Corn Procurement and Working Capital Agreement with J.D. Heiskell, the Company agreed to procure whole yellow corn and grain sorghum, primarily from J.D. Heiskell. The Company has the ability to obtain grain from other sources subject to certain conditions; however, in the past all the Company’s grain purchases have been from J.D. Heiskell. Title and risk of loss of the corn pass to the Company when the corn is deposited into the Keyes Plant weigh bin. The term of the Corn Procurement and Working Capital Agreement expires on December 31, 2020 and the term can be automatically renewed for additional one-year terms. J.D. Heiskell further agrees to sell all WDG the Company produces to A.L. Gilbert. The Company markets and sells DCO to A.L. Gilbert and other third parties under the J.D. Heiskell Purchasing Agreement. The Company’s relationships with J.D. Heiskell, and A.L. Gilbert are well established and the Company believes that the relationships are beneficial to all parties involved in utilizing the distribution logistics, reaching out to widespread customer base, managing inventory, and building working capital relationships. These agreements are ordinary purchase and sale agency agreements for the Keyes Plant. On May 13, 2020, J.D. Heiskell and the Company entered into Amendment No.1 to the J.D. Heiskell Purchasing Agreement to remove J.D. Heiskell’s obligations to purchase ethanol from the Company under the J.D. Heiskell Purchasing Agreement.

The J.D. Heiskell’s sales activity associated with the Corn Procurement and Working Capital Agreement for the three and nine months ended September 30, 2020 and 2019 are as follows:

	As of and for the three months ended September 30,				As of and for the nine months ended September 30,
	2020		2019		2020		2019
Ethanol sales	$	-	$	27,456	$	26,049	$	84,453
Wet distiller's grains sales		7,143		8,783		22,983		26,119
Corn oil sales		827		934		2,806		2,586
Corn purchases		25,513		30,446		77,268		90,426
Accounts receivable		161		1,066		161		1,066
Accounts payable		1,978		2,484		1,978		2,484

Ethanol and Wet Distillers Grains Marketing Arrangement. The Company entered into an Ethanol Marketing Agreement with Kinergy and a Wet Distillers Grains Marketing Agreement with A.L. Gilbert. Under the terms of the agreements, subject to certain conditions, the Ethanol Marketing Agreement matures on August 31, 2021 and the Wet Distillers Grains Marketing Agreement matures on December 31, 2020 with automatic one-year renewals thereafter. For the three months ended September 30, 2020 and 2019, the Company expensed marketing costs of $0.6 million for each period under the terms of both the Ethanol Marketing Agreement and the Wet Distillers Grains Marketing Agreement. For the nine months ended September 30, 2020 and 2019, the Company expensed marketing costs of $1.7 million and $1.9 million, respectively.