Quarterly report pursuant to Section 13 or 15(d)

Derivative Instruments

v3.19.2
Derivative Instruments
6 Months Ended
Jun. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments DERIVATIVE INSTRUMENTS
The Company enters into New York Mercantile Exchange NY Harbor ULSD ("NY Harbor ULSD" or previously referred to as heating oil), CBOT Soybean Oil (previously referred to as soybean oil) and New York Mercantile Exchange Natural Gas futures, swaps and options ("commodity contract derivatives") to reduce the risk of price volatility related to anticipated purchases of feedstock raw materials and to protect cash margins from potentially adverse effects of price volatility on biomass-based diesel sales where prices are set at a future date. All of the Company’s commodity contract derivatives are designated as non-hedge derivatives and recorded at fair value on the Condensed Consolidated Balance Sheets. Unrealized gains and losses are recognized as a component of biomass-based diesel costs of goods sold reflected in current results of operations. As of June 30, 2019, the net notional volumes of NY Harbor ULSD, CBOT Soybean Oil and NYMEX Natural Gas covered under the open commodity derivative contracts were approximately 50 million gallons, 3 million pounds and 2 million million British thermal units, respectively.
The Company offsets the fair value amounts recognized for its commodity contract derivatives with cash collateral with the same counterparty under a master netting agreement. The net position is presented within prepaid and other assets in the Condensed Consolidated Balance Sheets. The following table sets forth the fair value of the Company's commodity contract derivatives and amounts that offset within the Condensed Consolidated Balance Sheets:
   
June 30, 2019
 
December 31, 2018
   
Assets
 
Liabilities
 
Assets
 
Liabilities
Gross amounts of derivatives recognized at fair value
$
1,121

 
$
3,371

 
$
11,843

 
$
1,799

Cash collateral
8,330

 

 
3,755

 

Total gross amount recognized
9,451

 
3,371

 
15,598

 
1,799

Gross amounts offset
(3,371
)
 
(3,371
)
 
(1,799
)
 
(1,799
)
Net amount reported in the condensed consolidated balance sheets
$
6,080

 
$

 
$
13,799

 
$

The following table sets forth the commodity contract derivatives gains and (losses) included in the Condensed Consolidated Statements of Operations:
   
Location of Gain (Loss)
Recognized in income
 
Three Months 
 Ended 
 June 30, 
 2019
 
Three Months 
 Ended 
 June 30, 
 2018
 
Six Months 
 Ended 
 June 30, 
 2019
 
Six Months 
 Ended 
 June 30, 
 2018
Commodity derivatives
Cost of goods sold – Biomass-based diesel
 
$
(5,571
)
 
$
(12,909
)
 
$
(28,310
)
 
$
(15,347
)