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Note 3 - Derivative Instruments
3 Months Ended
Mar. 31, 2017
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 assets 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
. 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 a gain of
$1,279
 and a loss of
$1,039
for the
three
months ended
March
31,
2017
and
2016,
respectively.  
 
The volumes and carrying values of FutureFuel
’s derivative instruments were as follows at:
 
 
   
Asset/ (Liability)
 
 
 
   
March 31, 2017
   
December 31, 2016
 
   
Quantity (contracts) Long/(Short)
   
Fair Value
   
Quantity (contracts) Long/(Short)
     
Fair
Value
 
Regulated options, included in other current assets
   
(200
)   $
(1,462
)    
-
      $
-
 
Regulated fixed price future commitments, included in other current assets
   
23
    $
2
     
(135
)     $
(258
)
 
 
The margin account maintained with a broker to collateralize these derivative instruments
carried an account balance of
$1,982
and
$758
at
March
31,
2017
and
December
31,
2016,
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.