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Note 3 - Derivative Instruments
6 Months Ended
Jun. 30, 2016
Notes to Financial Statements  
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 asset
s 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
. 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. Realized gains and losses on derivative instruments and 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 losses of $5,139 and $3,056 for the three months ended June 30, 2016 and 2015, respectively, and losses of $6,178 and $2,337 for the six months ended June 30, 2016 and 2015, respectively.  
 
The volumes and carrying values of FutureFuel
’s derivative instruments were as follows at:
 
   
Asset/ (Liability)
 
   
June 30, 2016
   
December 31, 2015
 
   
Quantity (contracts)
Short
   
Fair Value
   
Quantity (contracts) Short
   
Fair Value
 
Regulated options, included in other current assets
    150     $ (1,520 )     200     $ (427 )
Regulated fixed price future commitments, included in other current assets
    96     $ 14       631     $ 3,789  
 
 
The margin account maintained with a broker to collateralize these derivative instruments carried
an account balance of $3,234 and $225 at June 30, 2016 and December 31, 2015, respectively, and is classified as other current assets in the consolidated balance sheet. The carrying values of the margin account and of the derivative instruments are included net, in other current assets.