Fair Value Disclosures

3 Months Ended

Mar. 31, 2021

4. FAIR VALUE DISCLOSURES

The following methods, assumptions and valuation techniques were used in estimating the fair value of the company’s financial instruments:

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities the company can access at the measurement date.

Level 2 – directly or indirectly observable inputs such as quoted prices for similar assets or liabilities in active markets other than quoted prices included within Level 1, quoted prices for identical or similar assets in markets that are not active, and other inputs that are observable or can be substantially corroborated by observable market data through correlation or

other means. Grain inventories held for sale in the agribusiness and energy services segment are valued at nearby futures values, plus or minus nearby basis values, which represent differences in local markets including transportation or commodity quality or grade differences.

Level 3 – unobservable inputs that are supported by little or no market activity and comprise a significant component of the fair value of the assets or liabilities. The company currently does not have any recurring Level 3 financial instruments.

Derivative contracts include exchange-traded commodity futures and options contracts and forward commodity purchase and sale contracts. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified in Level 1. The majority of the company’s exchange-traded futures and options contracts are cash-settled on a daily basis.

There have been no changes in valuation techniques and inputs used in measuring fair value. The company’s assets and liabilities by level are as follows (in thousands):


	Fair Value Measurements at March 31, 2021
	Quoted Prices in ‎ Active Markets for ‎Identical Assets		Significant Other ‎Observable Inputs
	(Level 1)		(Level 2)		Total
Assets:
Cash and cash equivalents	$	446,833	$	-	$	446,833
Restricted cash		207,593		-		207,593
Inventories carried at market		-		69,132		69,132
Unrealized gains on derivatives		-		19,365		19,365
Other assets		111		42		153
Total assets measured at fair value	$	654,537	$	88,539	$	743,076

Liabilities:
Accounts payable ⁽¹⁾	$	-	$	20,281	$	20,281
Unrealized losses on derivatives		-		6,313		6,313
Total liabilities measured at fair value	$	-	$	26,594	$	26,594


	Fair Value Measurements at December 31, 2020
	Quoted Prices in ‎ Active Markets for ‎Identical Assets		Significant Other ‎Observable Inputs
	(Level 1)		(Level 2)		Total
Assets:
Cash and cash equivalents	$	233,860	$	-	$	233,860
Restricted cash		40,950		-		40,950
Inventories carried at market		-		77,900		77,900
Unrealized gains on derivatives		-		21,956		21,956
Other assets		112		29		141
Total assets measured at fair value	$	274,922	$	99,885	$	374,807

Liabilities:
Accounts payable ⁽¹⁾	$	-	$	19,355	$	19,355
Unrealized losses on derivatives		-		10,997		10,997
Total liabilities measured at fair value	$	-	$	30,352	$	30,352

(1)Accounts payable is generally stated at historical amounts with the exception of $20.3 million and $19.4 million at March 31, 2021 and December 31, 2020, respectively, related to certain delivered inventory for which the payable fluctuates based on changes in commodity prices. These payables are hybrid financial instruments for which the company has elected the fair value option.

The company believes the fair value of its debt approximated book value at March 31, 2021. The fair value of the company’s debt was approximately $535.9 million compared with a book value of $526.2 million at December 31, 2020. The company estimated the fair value of its outstanding debt using Level 2 inputs. The company believes the fair values of its

accounts receivable approximated book value, which was $62.5 million and $55.6 million at March 31, 2021 and December 31, 2020, respectively.

Although the company currently does not have any recurring Level 3 financial measurements, the fair values of tangible and intangible assets and goodwill acquired represent Level 3 measurements which were derived using a combination of the income approach, market approach and cost approach for the specific assets or liabilities being valued.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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