Physical Commodities Inventory

12 Months Ended

Sep. 30, 2020

The Company’s inventories consist of finished physical commodities as shown below.


(in millions)	September 30, 2020		September 30, 2019
Physical Ag & Energy(1)	$	201.5	$	144.8
Precious metals - held by broker-dealer subsidiary(2)	14.2		7.1
Precious metals - held by non-broker-dealer subsidiaries(3)	65.4		77.4
Physical commodities inventory	$	281.1	$	229.3

(1) Physical Ag & Energy consists of agricultural commodity inventories, including corn, soybeans, wheat, dried distillers grain, canola, sorghum, coffee, cocoa, cotton, and others. The agricultural commodity inventories are carried at net realizable value, which approximates selling prices in the ordinary course of business, less disposal costs, with changes in net realizable value included as a component of ‘cost of sales of physical commodities’ on the consolidated income statements. The agricultural inventories have reliable, readily determinable and realizable market prices, have relatively insignificant costs of disposal and are available for immediate delivery. Physical Ag & Energy also consists of energy related inventories, including primarily propane, gasoline, and kerosene, which are valued at the lower of cost or net realizable value.

(2) Precious metals held by the Company’s subsidiary, StoneX Financial Ltd, a U.K. based broker-dealer subsidiary, is measured at fair value, with changes in fair value included as a component of ‘principal gains, net’ on the consolidated income statements, in accordance with U.S. GAAP accounting requirements for broker-dealers.

(3) Precious metals inventory held by subsidiaries that are not broker-dealers are valued at the lower of cost or net realizable value.

The Company has recorded lower of cost or net realizable value adjustments for certain precious metals inventory of $0.7 million and $0.5 million as of September 30, 2020 and 2019, respectively. The adjustments are included in ‘cost of sales of physical commodities’ in the consolidated income statements.

The Company has recorded lower of cost or net realizable value adjustments for certain physical inventory of crude oil and low sulfur fuel oil primarily based on quality degradation and consideration of costs to sell of $7.6 million. The adjustments are included in ‘cost of sales of physical commodities’ in the consolidated income statements. The Company is attempting to recover this write down from its supplier, however there is substantial uncertainty as to whether the Company will be successful. The Company continues to pursue all legal avenues available to it regarding this matter.