Note 3 - Derivative Instruments |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Text Block] |
FutureFuel is exposed to certain risks relating to its ongoing business operations. Commodity pric e 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 gains of $803 and $6 ,456 for the three months ended September 30, 2016 and 2015, respectively, and losses of $5 ,375 and gains of $4,119 for the nine months ended September 30, 2016 and 2015, respectively. The volumes and carrying values of FutureFuel ’s derivative instruments were as follows at:
The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $4,232 and $225 at September 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. |
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