Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Financial Instruments

The fair values of the company’s derivative financial instruments and the line items on the consolidated balance sheets where they are reported are as follows (in thousands):

	Asset Derivatives' Fair Value					Liability Derivatives' Fair Value
	June 30, 2022			December 31, 2021		June 30, 2022		December 31, 2021
Derivative financial instruments - forwards	$	40,474	(1)	$	26,738	$	49,959	$	26,117	(2)
Other assets	54			8		—		—
Other liabilities	—			—		71		196
Total	$	40,528		$	26,746	$	50,030	$	26,313

(1)At June 30, 2022, derivative financial instruments, as reflected on the balance sheet, includes net unrealized gains on exchange traded futures and options contracts of $19.9 million, which included $11.6 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments, $14.8 million of unrealized gains on derivative financial instruments designated as fair value hedging instruments, and the balance representing economic hedges.

(2)At December 31, 2021, derivative financial instruments, as reflected on the balance sheet, includes net unrealized losses on exchange traded futures and options contracts of $17.1 million, which include $1.3 million of net unrealized losses on derivative financial instruments designated as cash flow hedging instruments, $0.5 million of unrealized losses on derivative financial instruments designated as fair value hedging instruments, and the balance representing economic hedges.

Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The gains or losses recognized in income and other comprehensive income related to the company’s derivative financial instruments and the line items on the consolidated financial statements where they are reported are as follows (in thousands):

	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues	$	(1,111)	$	(23,692)	$	(1,739)	$	(38,880)
Cost of goods sold	(2,282)		18,485		1,012		35,484
Net loss recognized in income (loss) before income taxes	$	(3,393)	$	(5,207)	$	(727)	$	(3,396)

	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
Gain (Loss) Recognized in Other Comprehensive Income on Derivatives	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Commodity contracts	$	(14,114)	$	6,747	$	(6,807)	$	371

		Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income  on Derivatives	Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021
Exchange traded futures and options	Revenues	$	2,714	$	(14,622)	$	(31)	$	(56,536)
Forwards	Revenues	6,880		3,521		4,267		4,641
Exchange trade futures and options	Costs of goods sold	27,355		(3,996)		(40,208)		7,041
Forwards	Costs of goods sold	(37,458)		6,987		(18,297)		4,513
Net gain (loss) recognized in income (loss) before income taxes		$	(509)	$	(8,110)	$	(54,269)	$	(40,341)

The following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for the fair value hedged items (in thousands):

	June 30, 2022				December 31, 2021
Line Item in the Consolidated Balance Sheet in Which the Hedged Item is Included	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets		Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Inventories	$	58,185	$	3,118	$	72,320	$	6,291

Effect of Cash Flow and Fair Value Hedge Accounting on the Statements of Operations

	Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Three Months Ended June 30,
	2022				2021
	Revenue		Cost of Goods Sold		Revenue		Cost of Goods Sold
Gain (loss) on cash flow hedging relationships:
Commodity contracts:
Amount of gain (loss) on exchange traded futures reclassified from accumulated other comprehensive income into income	$	(1,111)	$	(2,282)	$	(23,692)	$	18,485
Gain (loss) on fair value hedging relationships:
Commodity contracts:
Fair-value hedged inventories	—		(8,550)		—		10,406
Exchange traded futures designated as hedging instruments	—		12,533		—		(7,244)
Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded	$	(1,111)	$	1,701	$	(23,692)	$	21,647

	Location and Amount of Gain (Loss) Recognized in Income on Cash Flow and Fair Value Hedging Relationships for the Six Months Ended June 30,
	2022				2021
	Revenue		Cost of Goods Sold		Revenue		Cost of Goods Sold
Gain (loss) on cash flow hedging relationships:
Commodity contracts:
Amount of gain (loss) on exchange traded futures reclassified from accumulated other comprehensive income into income	$	(1,739)	$	1,012	$	(38,880)	$	35,484
Gain (loss) on fair value hedging relationships:
Commodity contracts:
Fair-value hedged inventories	—		9,836		—		18,373
Exchange traded futures designated as hedging instruments	—		(4,711)		—		(14,352)
Total amounts of income and expense line items presented in the statement of operations in which the effects of cash flow or fair value hedges are recorded	$	(1,739)	$	6,137	$	(38,880)	$	39,505

Open Position Derivative Financial Instruments

The notional volume of open commodity derivative positions as of June 30, 2022, are as follows (in thousands):

	Exchange Traded (1)		Non-Exchange Traded (2)
Derivative Instruments	Net Long & (Short)		Long	(Short)	Unit of Measure	Commodity
Futures	(40,390)				Bushels	Corn
Futures	6,930	(3)			Bushels	Corn
Futures	(4,475)	(4)			Bushels	Corn
Futures	(62,118)				Gallons	Ethanol
Futures	(23,058)	(3)			Gallons	Ethanol
Futures	3,143				MmBTU	Natural Gas
Futures	7,680	(3)			MmBTU	Natural Gas
Futures	(4,555)	(4)			MmBTU	Natural Gas
Forwards			43,502	(18)	Bushels	Corn
Forwards			—	(285,395)	Gallons	Ethanol
Forwards			136	(395)	Tons	Distillers Grains
Forwards			—	(83,308)	Pounds	Corn Oil
Forwards			27,116	(87)	MmBTU	Natural Gas

(1)Notional volume of exchange traded futures and options are presented on a net long and (short) position basis. Options are presented on a delta-adjusted basis.

(2)Notional volume of non-exchange traded forward physical contracts are presented on a gross long and (short) position basis including both fixed-price and basis contracts, for which only the basis portion of the contract price is fixed.

(3)Notional volume of exchange traded futures used for cash flow hedges.

(4)Notional volume of exchange traded futures used for fair value hedges.