Derivative Financial Instruments |
6 Months Ended |
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Jun. 30, 2021 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Derivative Financial Instruments | Derivative Financial Instruments: The Company is subject to various types of market risks, including interest rate risk, foreign currency exchange rate transaction and translation risk and commodity pricing risk. Management may take actions to mitigate the exposure to these types of risks, including entering into forward purchase contracts and other financial instruments. Currently, the Company manages a portion of its commodity pricing risks by using derivative instruments. The Company does not seek to engage in trading activities or take speculative positions with any financial instrument arrangement. The Company has entered into natural gas derivative instruments with counterparties it views as creditworthy. However, the Company does attempt to mitigate its counterparty credit risk exposures by, among other things, entering into master netting agreements with some of these counterparties. The Company records derivative financial instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. The assets and liabilities recorded as of June 30, 2021 and December 31, 2020 were not material. Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the derivative instrument and the related change in value of the underlying hedged item. Depending on the exposure being hedged, the Company must designate the hedging instrument as a fair value hedge, a cash flow hedge or a net investment in foreign operations hedge. For the qualifying derivative instruments that have been designated as hedges, the change in fair value is recognized through earnings when the underlying transaction being hedged affects earnings, allowing a derivative’s gains and losses to offset related results from the hedged item in the statements of operations. Any ineffectiveness related to these hedges was not material for any of the periods presented. For derivative instruments that have not been designated as hedges, the entire change in fair value is recorded through earnings in the period of change. Natural Gas Derivative Instruments Natural gas is consumed at several of the Company’s production facilities, and changes in natural gas prices impact the Company’s operating margin. The Company’s objective is to reduce the earnings and cash flow impacts of changes in market prices of natural gas by fixing the purchase price of up to 90% of its forecasted natural gas usage. It is the Company’s policy to consider hedging portions of its natural gas usage up to 36 months in advance of the forecasted purchase. As of June 30, 2021, the Company had entered into natural gas derivative instruments to hedge a portion of its natural gas purchase requirements through December 2022. As of June 30, 2021 and December 31, 2020, the Company had agreements in place to hedge forecasted natural gas purchases of 2.3 million and 2.5 million MMBtus, respectively. All natural gas derivative instruments held by the Company as of June 30, 2021 and December 31, 2020 qualified and were designated as cash flow hedges. As of June 30, 2021, the Company expects to reclassify from AOCL to earnings during the next twelve months $1.6 million of net gains on derivative instruments related to its natural gas hedges. Foreign Currency Instrument In April 2021, the Company entered into a non-deliverable foreign currency forward of R$500.0 million Brazilian reais to buy U.S. dollars and to sell Brazilian reais. The forward matured on July 1, 2021, which coincides with the closing of the sale of the South America specialty plant nutrition business. As of June 30 2021, the Company has recorded a payable of $9.6 million included in accrued expenses and other current liabilities in its Consolidated Balance Sheet related to this instrument (see Note 14).
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