10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the fiscal quarter ended June 30, 2016
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Commission file number 000-53202

HOMELAND ENERGY SOLUTIONS, LLC
(Exact name of registrant as specified in its charter)
Iowa	20-3919356
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2779 Highway 24, Lawler, Iowa	52154
(Address of principal executive offices)	(Zip Code)
(563) 238-5555
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Membership Units

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes    o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller Reporting Company	o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes x No

As of August 12, 2016, we had 90,445 membership units outstanding. On June 13, 2013, the Company entered into an agreement with Steve Retterath, the Company's largest equity holder, to repurchase and retire all of the units owned by Mr. Retterath. The Company agreed to repurchase and retire 25,860 membership units owned by Mr. Retterath in exchange for $30 million. The Company believes that it has a binding agreement with Mr. Retterath. Mr. Retterath contends he is not bound by the agreement.  The Company's position is as of the closing date, Mr. Retterath is no longer the equitable owner of any membership units in the Company. As a result, the Company has recorded a $30 million short-term liability related to the amount the Company agreed to pay Mr. Retterath to repurchase his membership units and has correspondingly reduced members' equity on our balance sheet. The 90,445 membership units outstanding include the contested membership units the Company agreed to repurchase from Mr. Retterath.

INDEX

	Page No.
Part I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	22
Item 4. Controls and Procedures	22
Part II. OTHER INFORMATION	23
Item 1. Legal Proceedings	23
Item 1A. Risk Factors	24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3. Defaults Upon Senior Securities	24
Item 4. Mine Safety Disclosures	24
Item 5. Other Information	24
Item 6. Exhibits	25
Signatures	25

PART I.        FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Homeland Energy Solutions, LLC

Balance Sheets

	June 30, 2016		December 31, 2015
ASSETS	(Unaudited)		(Audited)
CURRENT ASSETS
Cash and cash equivalents	$	24,778,119	$	20,256,678
Trading securities	41,649,829		40,730,621
Accounts receivable	3,612,579		4,875,102
Inventory	9,150,688		7,653,149
Prepaid and other	2,452,879		2,382,674
Derivative instruments	2,261,370		705,549
Total current assets	83,905,464		76,603,773
PROPERTY AND EQUIPMENT
Land and improvements	22,539,771		22,539,771
Buildings	5,817,054		5,684,546
Equipment	151,511,702		149,732,809
Construction in progress	7,732,799		2,518,695
	187,601,326		180,475,821
Less accumulated depreciation	80,271,730		74,755,593
Total property and equipment	107,329,596		105,720,228
OTHER ASSETS
Utility rights, net of amortization of $1,251,023 and $1,182,829	1,057,006		1,125,200
Other assets	3,301,012		3,543,028
Total other assets	4,358,018		4,668,228
TOTAL ASSETS	$	195,593,078	$	186,992,229

See Notes to Unaudited Financial Statements.

3

Homeland Energy Solutions, LLC

Balance Sheets (continued)

	June 30, 2016		December 31, 2015
LIABILITIES AND MEMBERS' EQUITY	(Unaudited)		(Audited)
CURRENT LIABILITIES
Accounts payable	$	4,571,515	$	6,522,326
Due to former member	30,000,000		30,000,000
Accrued expenses	668,141		1,139,020
Total current liabilities	35,239,656		37,661,346
COMMITMENTS AND CONTINGENCIES
LONG-TERM LIABILITIES
Other liabilities	157,992		350,059
Total long-term liabilities	157,992		350,059
MEMBERS' EQUITY (64,585 units issued and outstanding)	160,195,430		148,980,824
TOTAL LIABILITIES AND MEMBERS' EQUITY	$	195,593,078	$	186,992,229

See Notes to Unaudited Financial Statements.

4

Homeland Energy Solutions, LLC

Statements of Operations

(Unaudited)

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Revenue	$	70,146,120	$	72,749,789	$	131,456,869	$	134,419,822
Costs of goods sold	61,077,982		63,524,613		119,810,495		122,288,399
Gross profit	9,068,138		9,225,176		11,646,374		12,131,423
Selling, general and administrative expenses	736,312		925,185		1,570,767		1,869,458
Operating income	8,331,826		8,299,991		10,075,607		10,261,965
Other income
Interest income	2,423		12,319		4,777		18,048
Other income	406,991		32,991		1,134,222		657,445
Total other income	409,414		45,310		1,138,999		675,493
Net income	$	8,741,240	$	8,345,301	$	11,214,606	$	10,937,458
Basic & diluted net income per capital unit	$	135.34	$	129.21	$	173.64	$	169.35
Weighted average number of units outstanding for the calculation of basic & diluted net income per capital unit	64,585		64,585		64,585		64,585

See Notes to Unaudited Financial Statements.

5

Homeland Energy Solutions, LLC

Statements of Cash Flows

(Unaudited)

	Six Months Ended			Six Months Ended
	June 30, 2016			June 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	11,214,606		$	10,937,458
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,584,331			5,263,084
Unrealized (gain) loss on risk management activities	(1,555,821		)	1,939,753
Unrealized (gain) on trading securities activities	(919,208		)	(259,569		)
Change in working capital components:
Accounts receivable	1,262,523			(3,196,701		)
Inventory	(1,497,539		)	(1,043,850		)
Prepaid and other	(70,205		)	201,163
Accounts payable and other accrued expenses	(2,657,757		)	(5,008,052		)
Net cash provided by operating activities	11,360,930			8,833,286
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of trading securities	—			(8,254,031		)
Payments for equipment and construction in progress	(7,081,505		)	(4,670,748		)
Decrease (Increase) in other assets	242,016			(176,048		)
Net cash (used in) investing activities	(6,839,489		)	(13,100,827		)
CASH FLOWS FROM FINANCING ACTIVITIES
Distribution to members	—			(9,816,920		)
Net cash (used in) financing activities	—			(9,816,920		)
Net increase (decrease) in cash and cash equivalents	4,521,441			(14,084,461		)
Cash and Cash Equivalents - Beginning	20,256,678			32,522,840
Cash and Cash Equivalents - Ending	$	24,778,119		$	18,438,379
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accounts payable related to property and equipment	$	44,000		$	—

See Notes to Unaudited Financial Statements.

6

Homeland Energy Solutions, LLC

Notes to Unaudited Financial Statements

1. Nature of Business and Significant Accounting Policies

The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company's audited financial statements for the year ended December 31, 2015, contained in the Company's annual report on Form 10-K for 2015.

In the opinion of management, the interim condensed financial statements reflect all adjustments considered necessary for fair presentation. The adjustments made to these statements consist only of normal recurring adjustments.

Nature of Business

Homeland Energy Solutions, LLC (an Iowa Limited Liability Company) is located near Lawler, Iowa and was organized to pool investors for a 100 million gallon ethanol plant with distribution primarily throughout the United States. The Company has capacity to produce in excess of 145 million gallons annually and sells distillers dried grains and corn oil as byproducts of ethanol production.

Organization

Homeland Energy Solutions, LLC is organized as an Iowa limited liability company. The members' liability is limited as specified in Homeland Energy Solutions' operating agreement and pursuant to the Iowa Revised Uniform Limited Liability Company Act.

Significant Accounting Policies:

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with United States Generally Accepted Accounting Principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Cash & Cash Equivalents

The Company maintains its accounts primarily at one financial institution. At various times, the Company's cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced losses in such accounts.

Trading Securities

Investments bought and held principally for the purpose of selling them in the the near term are classified as trading securities. Trading securities are measured at fair value using prices obtained from pricing services. Any interest, dividends, and unrealized or realized gains and losses on the trading securities are recorded as part of other income (expense).

At December 31, 2015, trading securities consisted of short term bond mutual funds with an approximate cost of $41,157,000 and fair value of $40,731,000, respectively. At June 30, 2016, trading securities consisted of short term bond mutual funds with an approximate cost of $41,476,000 and fair value of $41,650,000, respectively. For the three and six months ended June 30, 2016 the Company recorded interest, dividend and net unrealized gains and losses from these investments of approximately $376,000 and $919,000, respectively. During the same time periods of 2015 the Company recorded interest, dividends and net unrealized gains and losses from these investments of approximately $7,000 and $260,000, respectively.

The Board of Directors voted to set aside up to $30 million in trading securities that will be used by the Company for the repurchase of 25,860 membership units held by Steve Retterath per the terms of an agreement with Mr. Retterath entered into on June 13, 2013 by the Company.

Receivables

Credit sales are made primarily to one customer and no collateral is required. The Company carries these accounts receivable at original invoice amount with no allowance for doubtful accounts due to the historical collection rates on these accounts.

7

Homeland Energy Solutions, LLC

Notes to Unaudited Financial Statements

Investments

The Company has a less than 20% investment interest in Renewable Products Marketing Group, LLC (RPMG). This investment is being accounted for under the equity method of accounting under which the Company's share of net income is recognized as income in the Company's statement of operations and added to the investment account. The investment balance is included in other assets and the income recognized as other income. The investment is evaluated for indications of impairment on a regular basis. A loss would be recognized when the fair value is determined to be less than the carrying value.

Revenue and Cost Recognition

Revenue from the sale of the Company's products is recognized at the time title to the goods and all risks of ownership transfer to the customers.  This generally occurs upon shipment, loading of the goods or when the customer picks up the goods. Interest income is recognized as earned. Shipping costs incurred by the Company in the sale of ethanol and distiller grains are not specifically identifiable and as a result, revenue from the sale of ethanol and distiller grains is recorded based on the net selling price reported to the Company from the marketer. Rail car lease costs incurred by the Company in the sale and shipment of distiller grain products are included in the cost of goods sold.

Inventories

Inventories are generally valued at the lower of cost (first-in, first-out) or net realizable value.  In the valuation of inventories and purchase and sale commitments, net realizable value is defined as estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.

Property & Equipment

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of the asset group may not be recoverable. If circumstances require a long-lived asset be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by the asset group to the carrying value of the asset group. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

Derivative Instruments

The Company evaluates its contracts to determine whether the contracts are derivative instruments. Certain contracts that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from the accounting and reporting requirements of derivative accounting.

The Company enters into short-term cash, option and futures contracts as a means of securing purchases of corn, natural gas and sales of ethanol for the plant and managing exposure to changes in commodity and energy prices. All of the Company's derivatives are designated as non-hedge derivatives for accounting purposes, with changes in fair value recognized in net income. Although the contracts are economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of its trading activity, the Company uses futures and option contracts through regulated commodity exchanges to manage its risk related to pricing of inventories. To reduce that risk, the Company generally takes positions using cash and futures contracts and options.

Realized and unrealized gains and losses related to derivative contracts related to corn and natural gas are included as a component of cost of goods sold and derivative contracts related to ethanol are included as a component of revenue in the accompanying financial statements. The fair values of contracts entered through commodity exchanges are presented on the accompanying balance sheet as derivative instruments. All contracts with the same counter party are reported on a net basis.

Committed Shares to be Redeemed

On June 13, 2013, the Company entered into an agreement with Steve Retterath, the Company's largest member, to repurchase and retire all of the membership units owned by Mr. Retterath. The Company agreed to close on this repurchase on or before

8

Homeland Energy Solutions, LLC

Notes to Unaudited Financial Statements

August 1, 2013. The Company agreed to repurchase and retire 25,860 membership units owned by Mr. Retterath in exchange for $30 million, to be paid in two equal installments payable at closing and on July 1, 2014. The transaction failed to close by the scheduled date due to objections by Mr. Retterath. Due to all conditions of the agreement being met prior to, or on, August 1, 2013, the Company believes that it has a binding agreement with Mr. Retterath; as such the commitment to repurchase and retire the membership units is reflected in the financial statements as a current liability, due to former member, as if the transaction had closed on August 1, 2013. See Note 9 for additional information.

Net Income per Unit

Basic and diluted net income per unit is computed by dividing net income by the weighted average number of members' units and members' unit equivalents outstanding during the period. There were no member unit equivalents outstanding during the periods presented; accordingly, the Company's basic and diluted net income per unit are the same.

Prior to, or on, August 1, 2013, the Company believes it has a binding agreement with Steve Retterath to repurchase and retire all 25,860 membership units owned by Mr. Retterath. These membership units have thus been excluded in the determination of net income per capital unit as presented in the Statement of Operations. The Company is currently involved in litigation with Mr. Retterath. There is potential that Mr. Retterath will continue as a unit holder upon conclusion of the litigation and said membership units would not be redeemed under the repurchase agreement. If the units are not redeemed, basic and diluted net income per unit, including the 25,860 units, for the three and six months ended June 30, 2016 would be $96.65 and $123.99, respectively. Net income per unit for the three and six months ended June 30, 2015 would have been $92.27 and $120.93, respectively.

Risks and Uncertainties

The Company has certain risks and uncertainties that it will experience during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol, distiller grains and corn oil to customers primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. For the six months ended June 30, 2016, ethanol sales averaged approximately 78% of total revenues, while approximately 18% of revenues were generated from the sale of distiller grains. Corn oil sales attributed for approximately 4% of revenues during this time period. For the six months ended June 30, 2016, corn costs averaged approximately 81% of cost of goods sold.

The Company's operating and financial performance is largely driven by the prices at which ethanol is sold and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, and government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities.

2.    INVENTORY

Inventory consisted of the following as of June 30, 2016 and December 31, 2015.

	June 30, 2016		December 31, 2015
Raw Materials	$	5,644,883	$	5,030,182
Work in Process	1,399,405		1,428,646
Finished Goods	2,106,400		1,194,321
Totals	$	9,150,688	$	7,653,149

3.    DEBT

Master Loan Agreement with Home Federal Savings Bank

On November 30, 2007, the Company entered into a Master Loan Agreement with Home Federal Savings Bank ("Home Federal") establishing a senior credit facility with Home Federal for the construction of a 100 million gallon per year natural gas powered dry mill ethanol plant. In return, the Company executed a mortgage in favor of Home Federal creating a senior lien on the real

9

Homeland Energy Solutions, LLC

Notes to Unaudited Financial Statements

estate and plant and a security interest in all personal property located on Company property. The Company currently has a term revolving loan with Home Federal.

Term Revolving Loan

Under the terms of the Master Loan Agreement, the Company has a $20 million term revolving loan which has a maturity date of August 1, 2018. Interest on the term revolving loan accrues at a rate equal to the one month LIBOR plus 310 basis points, 3.536% on June 30, 2016. The Company is required to make monthly payments of interest until the maturity date of the term revolving loan on August 1, 2018, on which date the unpaid principal balance of the term revolving loan becomes due. There was no balance outstanding on the term revolving loan and $20 million available to be drawn as of June 30, 2016 and December 31, 2015.

Covenants

During the term of the Loans, the Company is subject to certain financial covenants at various times calculated monthly, quarterly or annually, including restriction of the payment of dividends and capital expenditures and maintenance of certain financial ratios including the minimum working capital and a fixed charge ratio as defined by the Master Loan Agreement. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the loans and/or the imposition of fees, charges or penalties.

4.    RELATED PARTY TRANSACTIONS

Due to former member

On June 13, 2013, we entered into an agreement with Steve Retterath, the Company's largest member, to repurchase and retire all of the units owned by Mr. Retterath. The Company agreed to close on this repurchase on or before August 1, 2013. The Company agreed to repurchase and retire 25,860 membership units owned by Mr. Retterath in exchange for $30 million, to be paid in two equal installments payable at closing and on July 1, 2014. The transaction failed to close by the scheduled date due to objections by Mr. Retterath. The Company believes that it has a binding agreement with Mr. Retterath. On August 14, 2013, the Company filed a lawsuit against Mr. Retterath in Iowa state court to enforce the terms of the repurchase agreement. The Company is asking the Iowa state court to require Mr. Retterath to complete the repurchase agreement pursuant to its terms.

Mr. Retterath contends he is not bound by the agreement.  The Company's position is as of the closing date, Mr. Retterath is no longer the equitable owner of any membership units in the Company. As a result, in 2013 the Company recorded a $30 million short-term liability related to the amount the Company agreed to pay Mr. Retterath to repurchase his membership units and correspondingly reduced members' equity on the balance sheet. If the Company is ultimately unsuccessful in its lawsuit against Mr. Retterath, the Company will reevaluate the accounting considerations made during the period of time that the lawsuit is pending.

Other matters

The Company has purchased corn and materials from members of its Board of Directors who own or manage elevators or are local producers of corn. Purchases during the three and six months ended June 30, 2016 totaled approximately $2,584,000 and $4,381,000 and during the three and six months ended June 30, 2015 totaled approximately $991,000 and $3,194,000 respectively. Amounts due to these members was $0 at June 30, 2016 and December 31, 2015.

5.    COMMITMENTS, CONTINGENCIES AND AGREEMENTS

Ethanol, corn oil, and distiller grains marketing agreements and major customers

The Company has entered into a marketing agreement with RPMG, a related party, to sell all ethanol produced at the plant at a mutually agreed on price, less commission and transportation charges. As of June 30, 2016, the Company had commitments to sell approximately 6 million of its produced gallons of ethanol at various fixed prices and 30 million of its produced gallons of ethanol at basis price levels indexed against exchanges for delivery through September 30, 2016.

The Company has entered into a marketing agreement with RPMG to sell all corn oil produced at the plant at a mutually agreed on price, less marketing fees and transportation charges. As of June 30, 2016, the Company had commitments to sell approximately 2 million pounds of corn oil at various fixed and basis price levels indexed against exchanges for delivery through July 31, 2016.

The Company also has an investment in RPMG, included in other assets, totaling approximately $2,468,000 as of June 30, 2016.

10

Homeland Energy Solutions, LLC

Notes to Unaudited Financial Statements

The Company has entered into a marketing agreement to sell all distiller grains produced at the plant to CHS, an unrelated party, at a mutually agreed on price, less commission and transportation charges. The agreement was renewed for another one year term on April 1, 2016. The agreement calls for automatic renewal for successive one-year terms unless 90-day prior written notice is given before the current term expires. As of June 30, 2016, the Company had approximately 35,000 tons of distiller grains commitments for delivery through August 2016 at various fixed prices.

Sales and marketing fees related to the agreements in place for the three and six months months ended June 30, 2016 and 2015 were approximately as follows:

	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
	June 30, 2016		June 30, 2016		June 30, 2015		June 30, 2015
Sales ethanol	$	55,245,000	$	102,235,000	$	53,236,000	$	97,532,000
Sales distiller grains	12,040,000		24,033,000		17,176,000		32,515,000
Sales corn oil	2,860,000		5,188,000		2,338,000		4,373,000
Marketing fees ethanol	$	42,000	$	84,000	$	42,000	$	84,000
Marketing fees distiller grains	189,000		395,000		205,000		366,000
Marketing fees corn oil	25,000		50,000		25,000		46,000
					As of June 30, 2016		As of December 31, 2015
Amount due from RPMG					$	1,770,000	$	3,641,000
Amount due from CHS					1,661,000		1,179,000

At June 30, 2016, the Company had approximately $24,797,000 in outstanding priced corn purchase commitments for bushels at various prices and approximately 1.82 million bushels of basis contracts through July 2017 accounted for under the normal purchase exclusion.

The Company has commitments for minimum purchases of various utilities such as electricity over the next 3 years, accounted for under the normal purchase exclusion, which are anticipated to approximate the following for the twelve month periods ending June 30:

2017	$	3,787,000
2018	3,787,000
2019	2,841,000
Total anticipated commitments	$	10,415,000

11

Homeland Energy Solutions, LLC

Notes to Unaudited Financial Statements

6.    LEASE OBLIGATIONS

The Company leases rail cars and rail moving equipment with original terms up to 5 years. The Company is obligated to pay costs of insurance, taxes, repairs and maintenance pursuant to the terms of the leases. Rent expense incurred for the operating leases during the three and six months ended June 30, 2016 was approximately $415,000 and $830,000, respectively, and for the same periods in 2015 was approximately $402,000 and $818,000, respectively.

At June 30, 2016, the Company had the following approximate minimum rental commitments under non-cancelable operating leases for the twelve month periods ended June 30:

2017	$	1,435,000
2018	413,000
Total lease commitments	$	1,848,000

7.    DERIVATIVE INSTRUMENTS

The Company's activities expose it to a variety of market risks, including the effects of changes in commodity prices. These financial exposures are monitored and managed by the Company as an integral part of its overall risk-management program. The Company's risk management program focuses on the unpredictability of financial and commodities markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange traded futures and options contracts to reduce its net position of merchandisable agricultural commodity inventories and forward cash purchase and sales contracts and uses exchange traded futures and options contracts to reduce price risk. Exchange-traded futures contracts are valued at market price. Changes in market price of exchange traded futures and options contracts related to corn and natural gas are recorded in costs of goods sold and changes in market prices of contracts related to the sale of ethanol, if applicable, are recorded in revenues.

The Company uses futures or options contracts to fix the purchase price of anticipated volumes of corn to be purchased and processed in a future month. The Company's plant will grind approximately 49 million bushels of corn per year.  During the previous period and over the next 12 months, the Company has hedged and anticipates hedging between 5% and 60% of its anticipated monthly grind.  At June 30, 2016, the Company has hedged portions of its anticipated monthly purchases for corn averaging approximately 11% of its anticipated monthly grind over the next twelve months.

The following table represents the approximate amount of realized/unrealized gains (losses) and changes in fair value recognized in earnings on commodity contracts for the three and six months ending June 30, 2016 and 2015 and the fair value of derivatives as of June 30, 2016 and December 31, 2015:

12

Homeland Energy Solutions, LLC

Notes to Unaudited Financial Statements

	Income Statement Classification	Realized Gain (Loss)			Change In Unrealized Gain (Loss)			Total Gain (Loss)
Derivatives not designated as hedging instruments:
Commodity contracts for the
three months ended June 30, 2016	Cost of Goods Sold	$	(545,000	)	$	1,850,000		$	1,305,000
Commodity contracts for the
three months ended June 30, 2015	Cost of Goods Sold	$	1,048,000		$	(3,090,000	)	$	(2,042,000	)
Commodity contracts for the
six months ended June 30, 2016	Cost of Goods Sold	$	(29,000	)	$	2,356,000		$	2,327,000
Commodity contracts for the
six months ended June 30, 2015	Cost of Goods Sold	$	1,536,000		$	(2,624,000	)	$	(1,088,000	)

	Balance Sheet Classification	June 30, 2016			December 31, 2015
Futures contracts through March 2017
In gain position		$	2,818,000		$	462,000
Cash (owed to) held by broker		(557,000		)	244,000
	Current Asset	$	2,261,000		$	706,000

8.    FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth below:

Trading securities: Trading securities consisting of corporate bonds and short term bond mutual funds are reported at fair value utilizing Level 1 inputs. Trading securities are measured at fair value using prices obtained from pricing services.

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Homeland Energy Solutions, LLC

Notes to Unaudited Financial Statements

Derivative financial instruments: Commodity futures and exchange-traded commodity options contracts are reported at fair value utilizing Level 1 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the CBOT and NYMEX markets. 

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Total		Level 1		Level 2		Level 3
As of June 30, 2016
Trading securities	$	41,650,000	$	41,650,000	$	—	$	—
Derivative financial instruments	$	2,818,000	$	2,818,000	$	—	$	—
As of December 31, 2015
Trading securities	$	40,731,000	$	40,731,000	$	—	$	—
Derivative financial instruments	$	462,000	$	462,000	$	—	$	—

9.    LITIGATION MATTERS

Retterath

In relation to the repurchase agreement discussed in Note 4, on August 1, 2013 Mr. Retterath filed a lawsuit against the Company along with several directors, the Company's former CEO, CFO, COO, a former director and the Company's outside legal counsel in Florida state court. Mr. Retterath is claiming that certain actions taken by the Company violated fiduciary duties owed to him as a member or fraudulently induced him to take certain actions. Mr. Retterath is also claiming violations of state and federal securities laws and violations of Florida's deceptive and unfair trade practices statutes. On August 14, 2013, the Company filed a lawsuit in Iowa state court to enforce the repurchase agreement the Company entered into with Mr. Retterath. No distributions have been paid to Mr. Retterath since the time of the original expected closing date of August 1, 2013.

GS Cleantech Corporation

On August 9, 2013, GS Cleantech Corporation (GS Cleantech), a subsidiary of Greenshift Corporation, filed a complaint against the Company alleging that the Company's operation of a corn oil extraction process licensed by the Company infringes patent rights claimed by GS Cleantech. GS Cleantech seeks royalties, damages and potentially triple damages associated with the alleged infringement, as well as attorney's fees from the Company. The Company filed a motion for summary judgment which was granted by the Court. The Company expects GS Cleantech will appeal this decision. The Company has filed an answer and counterclaims claiming invalidity of the patents, noninfringement, and inequitable conduct. The Company is not currently able to predict the outcome of the litigation with any degree of certainty.

10.    SUBSEQUENT EVENT

On July 18, 2016, the board of directors of Homeland Energy Solutions, LLC (the "Company") declared a distribution of $3,875,100 to be paid to 64,585 membership units which equals $60.00 per membership unit as of July 18, 2016. The Company paid this distribution in July 2016.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases you can identify forward-looking statements by the use of words such as "may," "will," "should," "anticipate," "believe," "expect," "plan," "future," "intend," "could," "estimate," "predict," "hope," "potential," "continue," or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the reasons described in this report or in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. We are not under any duty to update the forward-looking statements contained in this report. We cannot guarantee future results, levels of activity, performance or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits, completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

Overview

Homeland Energy Solutions, LLC (referred to herein as "we," "us," the "Company," or "Homeland") is an Iowa limited liability company. Homeland was formed on December 7, 2005 for the purpose of pooling investors for the development, construction and operation of a 100 million gallon per year ethanol plant located near Lawler, Iowa. We began producing ethanol and distiller grains at the plant in April 2009. We completed installation of corn oil extraction equipment and commenced selling corn oil during our fourth quarter of 2011. The ethanol plant is capable of operating at a rate in excess of 145 million gallons of ethanol per year.

On June 13, 2013, we entered into an agreement with Steve Retterath, our largest member, to repurchase and retire all of the units owned by Mr. Retterath. We agreed to repurchase and retire 25,860 membership units owned by Mr. Retterath in exchange for $30 million, to be paid in two equal installments payable at closing and on July 1, 2014. The transaction failed to close by August 1, 2013 due to objections by Mr. Retterath. The Company believes that it has a binding agreement with Mr. Retterath. On August 14, 2013, the Company filed a lawsuit against Mr. Retterath in Iowa state court to enforce the terms of the repurchase agreement. The Company is asking the Iowa state court to require Mr. Retterath to complete the repurchase agreement pursuant to its terms.

Mr. Retterath contends he is not bound by the agreement.  The Company's position is as of the closing date, Mr. Retterath is no longer the equitable owner of any membership units in the Company. As a result, we have recorded a $30 million short-term liability related to the amount we agreed to pay Mr. Retterath to repurchase his membership units and have correspondingly reduced members' equity on our balance sheet. If we are ultimately unsuccessful in our lawsuit against Mr. Retterath, the Company will reevaluate the accounting considerations made during the period of time that the lawsuit is pending.

On the scheduled closing date for the repurchase agreement, Mr. Retterath sued the Company along with several directors, our former CEO, CFO, COO, a former director and our outside legal counsel in Florida state court. This lawsuit was subsequently removed to federal court in the State of Florida and ultimately to federal court in the State of Iowa. The federal court in the State of Iowa dismissed the only federal claim in Mr. Retterath's lawsuit against the Company and remanded the case to Florida state court. We have filed a motion to dismiss this lawsuit in the Florida state court.

On February 18, 2015, we filed a motion for summary judgment asking the Iowa state court to rule that the repurchase agreement was valid and enforceable and ordering Mr. Retterath to perform his obligations pursuant to the repurchase agreement. Mr. Retterath along with his son and daughter-in-law filed motions for summary judgment asking the Iowa state court to rule that the repurchase agreement was invalid. The Iowa state court entered a ruling granting Homeland's motion for summary judgment and determined no membership vote was required as Mr. Retterath has contended. The Iowa state court also denied the summary judgment motions filed by Mr. Retterath and his son and daughter-in-law. Recently, Mr. Retterath and his son and daughter-in-law filed a motion to add a significant number of additional parties to the Iowa lawsuit along with additional claims against the Company. We have filed a resistance to Mr. Retterath's attempts to expand the scope of the Iowa lawsuit.

Details of both the Company's lawsuit against Mr. Retterath and Mr. Retterath's lawsuit are provided below in the section entitled "PART II - Item 1. Legal Proceedings."

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The Company is in the process of completing various capital improvements designed to increase the production efficiency and production capacity of the ethanol plant. The most significant of the capital projects is to add additional fermentation capacity which we believe will be operational during our third quarter of 2016.

Results of Operations

Comparison of Fiscal Quarters Ended June 30, 2016 and 2015

	2016			2015
Income Statement Data	Amount		%	Amount		%
Revenue	$	70,146,120	100.0	$	72,749,789	100.0
Costs of goods sold	61,077,982		87.1	63,524,613		87.3
Gross profit	9,068,138		12.9	9,225,176		12.7
Selling, general and administrative expenses	736,312		1.0	925,185		1.3
Operating income	8,331,826		11.9	8,299,991		11.4
Other income	409,414		0.6	45,310		0.1
Net income	$	8,741,240	12.5	$	8,345,301	11.5

Revenue

Our total revenue for our second quarter of 2016 was approximately 4% less than our total revenue for our second quarter of 2015. Management attributes this decrease in revenue with decreased distiller grains revenue, partially offset by increased ethanol and corn oil revenue during the 2016 period.

For our second quarter of 2016, our total ethanol revenue was approximately 4% greater than our second quarter of 2015 due to increased gallons of ethanol sold during the 2016 period, partially offset by lower average ethanol prices. The average price we received for our ethanol during our second quarter of 2016 was approximately 1% less than during our second quarter of 2015. Management attributes this decrease in ethanol prices with decreased gasoline prices which have impacted ethanol prices along with increased ethanol supply in the market. Ethanol exports have been higher recently, which management attributes to lower domestic ethanol prices and increased worldwide ethanol demand. Management believes that the ethanol industry must continue to expand export markets in order to offset recent increases in ethanol production.

We sold approximately 5% more gallons of ethanol during our second quarter of 2016 compared to the same period of 2015 due primarily to increased ethanol production and the timing of our ethanol shipments. Management anticipates ethanol production to be slightly higher compared to prior years due to capital improvements we are making at the ethanol plant designed to increase ethanol production along with improved corn to ethanol conversion efficiency which we anticipate will increase our total ethanol production. We also experienced less plant downtime during the 2016 period which resulted in increased production.

Our total distiller grains revenue was approximately 30% less during our second quarter of 2016 compared to the same period of 2015, due primarily to decreased distiller grains prices and sales. The average price we received for our dried distiller grains was approximately 29% less during our second quarter of 2016 compared to the same period of 2015. Further, the average price we received for our modified/wet distiller grains was approximately 21% less during our second quarter of 2016 compared to the same period of 2015. Management attributes these lower distiller grains prices to lower corn prices and decreased export demand from China due to an antidumping and countervailing duty investigation the Chinese commenced in January 2016. Distiller grains are typically used as a feed substitute for corn. Recently, distiller grains have been trading at a greater discount compared to a comparable amount of corn which management believes is indicative of decreased distiller grains demand. Management anticipates distillers grains will continue to trade at a significant discount compared to the price of corn due to anticipated strong corn supplies and relatively stable demand. We sold approximately 2% fewer total tons of distiller grains during our second quarter of 2016 compared to the same period of 2015 due to increased corn oil production and improved corn to ethanol conversion efficiency. When we produce more corn oil, it decreases the volume of distiller grains we produce. In addition, when we improve our corn to ethanol conversion efficiency, it requires fewer bushels of corn to produce ethanol which in turn reduces the volume of distiller grains we produce. Management anticipates distiller grains production will continue to be relatively stable despite

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anticipated increases in total production because of anticipated increases in our corn to ethanol conversion efficiency and anticipated increases in corn oil extraction.

Our total corn oil revenue was approximately 22% greater for our second quarter of 2016 compared to the same period of 2015 due to increased corn oil production and higher market corn oil prices during the 2016 period. We sold approximately 10% more pounds of corn oil during our second quarter of 2016 compared to the same period of 2015 primarily because of an increase in the amount of corn oil we produced per bushel of corn used. We added additional corn oil extraction equipment which allows us to increase the amount of corn oil we can produce per ton of distiller grains. The average price we received for our corn oil was approximately 10% greater during our second quarter of 2016 compared to the same period of 2015. This increase in corn oil prices occurred due to increased corn oil demand. Biodiesel production was spurred by the recent passage of the biodiesel blenders' tax credit for 2016 (and retroactively for 2015) which management believes positively impacts corn oil demand. Corn oil can be used as a raw material to produce biodiesel. Management anticipates relatively stable corn oil prices going forward. Management believes that the increase in corn oil demand may not continue past December 2016 when the biodiesel blenders' tax credit is scheduled to expire.

Cost of Goods Sold

Our two primary costs of production are corn costs and natural gas costs. Our total cost of goods sold was approximately 4% less for our second quarter of 2016 compared to the same period of 2015. Our cost of goods sold related to corn, without taking into account derivative instruments, was approximately 4% greater during our second quarter of 2016 compared to our second quarter of 2015 due to increased corn consumption due to our increased production, partially offset by lower market corn prices, without taking into account our derivative instruments. The average price we paid per bushel of corn was approximately 1% less during our second quarter of 2016 compared to our second quarter of 2015 due to increased market corn supplies and relatively stable corn demand. We processed approximately 5% more bushels of corn during our second quarter of 2016 compared to our second quarter of 2015 due to our increased total production at the ethanol plant, partially offset by improved corn to ethanol conversion efficiency. Management anticipates these lower corn prices will continue due to an improved balance between corn supply and demand as a result of the larger corn crops harvested in 2013, 2014 and 2015 along with relatively stable corn demand. Further, weather conditions have been favorable during the 2016 growing season leading to projections of a large corn crop to be harvested in the fall of 2016. If the 2016 corn crop is as large as is predicted, it may result in further reductions in market corn prices.

We experienced significantly lower natural gas prices during our second quarter of 2016 compared to the same period of 2015 due to ample natural gas supplies and relatively stable natural gas demand during the 2016 period. During our second quarter of 2016, the average delivered price we paid per MMBtu of natural gas was approximately 24% less compared to the same period of 2015. We used approximately 1% less MMBtu of natural gas during our second quarter of 2016 compared to our second quarter of 2015 despite our increased ethanol production due to our improved operating efficiencies. Management anticipates relatively stable natural gas prices during the rest of our 2016 fiscal year due to plentiful natural gas supplies and certain natural gas risk management positions we have in place which are designed to protect the price we pay for natural gas. Management does not expect significant shifts in market natural gas prices unless there are disruptions in natural gas production which impact natural gas supplies. If a shortage of natural gas were to occur in the future, it could result in significantly higher natural gas prices which could negatively impact our profitability.

We engage in risk management activities that are intended to fix the purchase price of the corn and natural gas we require to produce ethanol, distiller grains and corn oil. During our second quarter of 2016, we had a realized loss of approximately $545,000 and an unrealized gain of approximately $1,850,000 related to our corn derivative instruments. During our second quarter of 2015, we had a realized gain of approximately $1,048,000 and an unrealized loss of approximately $3,090,000 related to our corn derivative instruments. We recognize the gains or losses that result from changes in the value of our corn and natural gas derivative instruments in cost of goods sold as the changes occur. Our plant is expected to use approximately 49 million bushels of corn per year. As of June 30, 2016, the Company has hedged portions of its anticipated monthly purchases for corn averaging approximately 11% of its anticipated monthly grind for the next twelve months.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses were less during our second quarter of 2016 compared to our second quarter of 2015 primarily due to decreased consulting fees and legal fees related to our pending lawsuits.

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Other Income (Expense)

We had less interest income during our second quarter of 2016 compared to the same period of 2015 due to having less cash on hand during the 2016 period. Our other income was greater during our second quarter of 2016 compared to the same period of 2015 due to increased income from trading securities.

Comparison of the Six Months Ended June 30, 2016 and 2015

	2016			2015
Income Statement Data	Amount		%	Amount		%
Revenue	$	131,456,869	100.0	$	134,419,822	100.0
Costs of goods sold	119,810,495		91.1	122,288,399		91.0
Gross profit	11,646,374		8.9	12,131,423		9.0
Selling, general and administrative expenses	1,570,767		1.2	1,869,458		1.4
Operating income	10,075,607		7.7	10,261,965		7.6
Other income	1,138,999		0.9	675,493		0.5
Net income	$	11,214,606	8.5	$	10,937,458	8.1

Revenue

Our total revenue for the six months ended June 30, 2016 was approximately 2% less than our total revenue for the six months ended June 30, 2015. Management attributes this decrease in revenue with decreased market prices for our products, partially offset by increased sales volumes during the 2016 period.

For the six months ended June 30, 2016, our total ethanol revenue was approximately 5% greater than the six months ended June 30, 2015 due to increased gallons of ethanol sold during the 2016 period, partially offset by lower average ethanol prices. The average price we received for our ethanol during the six months ended June 30, 2016 was approximately 3% less than during the six months ended June 30, 2015. Management attributes this decrease in ethanol prices with decreased gasoline prices which have impacted ethanol prices. We sold approximately 8% more gallons of ethanol during the six months ended June 30, 2016 compared to the same period of 2015 due primarily to increased ethanol production.

Our total distiller grains revenue was approximately 26% less during the six months ended June 30, 2016 compared to the same period of 2015, due primarily to decreased distiller grains prices. The average price we received for our dried distiller grains was approximately 29% less during the six months ended June 30, 2016 compared to the same period of 2015. Further, the average price we received for our modified/wet distiller grains was approximately 20% less during the six months ended June 30, 2016 compared to the same period of 2015. Management attributes these lower distiller grains prices to lower corn prices and decreased export demand from China. We sold approximately 4% more total tons of distiller grains during the six months ended June 30, 2016 compared to the same period of 2015 due to increased total production at the ethanol plant.

Our total corn oil revenue was approximately 19% greater for the six months ended June 30, 2016 compared to the same period of 2015 due to the net effect of increased corn oil production partially offset by lower market corn oil prices during the 2016 period. We sold approximately 19% more pounds of corn oil during the six months ended June 30, 2016 compared to the same period of 2015 because of an increase in the amount of corn oil we produced per bushel of corn used along with increased total production at the ethanol plant. We added additional corn oil extraction equipment which allows us to increase the amount of corn oil we can produce per ton of distiller grains. The average price we received for our corn oil was approximately 1% less during the six months ended June 30, 2016 compared to the same period of 2015 due to increased market supply of corn oil compared to demand, especially during our first quarter of 2016.

Cost of Goods Sold

Our cost of goods sold related to corn, without taking into account derivative instruments, was approximately 1% greater during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 due to an increase in the amount of corn we consumed partially offset by decreased market prices for corn. The average price we paid per bushel of corn was

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approximately 5% less during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 due to increased market corn supplies and relatively stable corn demand. We processed approximately 6% more bushels of corn during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 due to our increased total production.

We experienced significantly lower natural gas prices during the six months ended June 30, 2016 compared to the same period of 2015 due to a milder winter and more stable market natural gas prices during the 2016 period. During the six months ended June 30, 2016, the average delivered price we paid per MMBtu of natural gas was approximately 24% less compared to the same period of 2015. We used approximately 1% fewer MMBtu of natural gas during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 despite our increased ethanol production due to our improved operating efficiencies.

During the six months ended June 30, 2016, we had a realized loss of approximately $29,000 and an unrealized gain of approximately $2,356,000 related to our corn derivative instruments. During the six months ended June 30, 2015, we had a realized gain of approximately $1,536,000 and an unrealized loss of approximately $2,624,000 related to our corn derivative instruments.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses were less during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 primarily due to decreased consulting fees and legal fees related to our pending lawsuits.

Other Income (Expense)

Our other income was greater during the six months ended June 30, 2016 compared to the same period of 2015 due to increased income from trading securities.

Changes in Financial Condition for the Six Months Ended June 30, 2016.

Balance Sheet Data	June 30, 2016		December 31, 2015
Total current assets	$	83,905,464	$	76,603,773
Total property and equipment	107,329,596		105,720,228
Total other assets	4,358,018		4,668,228
Total Assets	$	195,593,078	$	186,992,229
Total current liabilities	$	35,239,656	$	37,661,346
Total long-term liabilities	157,992		350,059
Total members' equity	160,195,430		148,980,824
Total Liabilities and Members' Equity	$	195,593,078	$	186,992,229

We had more cash and cash equivalents as of June 30, 2016 compared to December 31, 2015 due to income we generated from our operations. As of June 30, 2016, the value of our trading securities was higher compared to the trading securities we had at December 31, 2015 due to market changes. In order to fund our purchase obligation related to the Retterath repurchase agreement, we have allocated $30 million of our trading securities to the Retterath repurchase. Our accounts receivable was lower at June 30, 2016 compared to December 31, 2015 due to the timing of our quarter end with respect to shipments of our ethanol and payments from our marketer. We had more inventory on hand at June 30, 2016 compared to December 31, 2015 due to having more finished goods and raw materials inventory on hand at June 30, 2016 as a result of the timing of our quarter end. The value of our derivative instruments was higher at June 30, 2016 compared to December 31, 2015 because of changing prices for corn which impacts the value of our corn futures position.

Our net property and equipment was higher at June 30, 2016 compared to December 31, 2015 due to the net effect of capital expenditures we have been making at the ethanol plant offset by depreciation. Our other assets were comparable at June 30, 2016 and December 31, 2015.

Our current liabilities were lower at June 30, 2016 compared to December 31, 2015, primarily due to a reduction in our accounts payable and accrued expenses. We typically experience an increase in our accounts payable at the end of our fiscal year as our corn suppliers seek to defer income into a later tax year by deferring corn payments. Our accrued expenses were lower at June 30, 2016 compared to December 31, 2015 due to payment of wages and performance bonuses accrued at year end.

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Our long-term liabilities were lower at June 30, 2016 compared to December 31, 2015 primarily due to payments of vested bonus dollars to employees.

Liquidity and Capital Resources

Our primary sources of liquidity during our quarter ended June 30, 2016 were cash from our operations and our $20 million long-term revolving loan. Our credit facilities are described in greater detail below under "Short-Term and Long-Term Debt Sources." As of June 30, 2016, we had $20.0 million available pursuant to our revolving loan and approximately $24.8 million in cash and cash equivalents. We also had approximately $30 million at June 30, 2016 of trading securities for the Retterath repurchase agreement along with an additional approximately $11.6 million in trading securities which are not set aside for the Retterath repurchase. Based on financial forecasts performed by our management, we anticipate that we will have sufficient cash from our revolving loan and cash from our operations to continue to operate the ethanol plant at capacity for the next 12 months and beyond. We do not anticipate seeking additional equity or debt financing in the next 12 months. However, should we experience unfavorable operating conditions in the future, we may have to secure additional debt or equity financing for working capital or other purposes.

The following table shows cash flows for the six months months ended June 30, 2016 and 2015:

	2016			2015
Net cash provided by operating activities	$	11,360,930		$	8,833,286
Net cash (used in) investing activities	(6,839,489		)	(13,100,827		)
Net cash (used in) financing activities	—			(9,816,920		)
Cash at beginning of period	20,256,678			32,522,840
Cash at end of period	$	24,778,119		$	18,438,379

Cash Flow From Operations

Our operations provided more cash during our first six months of 2016 compared to the same period of 2015 primarily due to having more net income and using less cash for the payment of accounts payable and accrued expenses during the 2016 period.

Cash Flow From Investing Activities

We used less cash for investing activities during our first six months of 2016 compared to the first six months of 2015 because we did not purchase any trading securities during the 2016 period compared to approximately $8.3 million during the 2015 period, partially offset by more capital expenditures during the 2016 period.

Cash Flow From Financing Activities

We used less cash for financing activities during our first six months of 2016 compared to the same period of 2015 because we did not make any distributions to our members during the 2016 period. We paid a distribution of approximately $9.8 million during our first quarter of our 2015 fiscal year.

Short-Term and Long-Term Debt Sources

Master Loan Agreement with Home Federal Savings Bank

On November 30, 2007, we entered into a Master Loan Agreement with Home Federal Savings Bank (Home Federal) establishing a senior credit facility with Home Federal. In return, we executed a mortgage and a security agreement in favor of Home Federal creating a senior lien on substantially all of our assets. We currently have a $20 million term revolving loan with Home Federal.

Term Revolving Loan

We have a $20 million term revolving loan which has a maturity date of August 1, 2018. Interest on the term revolving loan accrues at a rate equal to the one month London Interbank Offered Rate (LIBOR) plus 310 basis points. We are required to

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make monthly payments of interest until the maturity date of the term revolving loan on August 1, 2018, on which date the unpaid principal balance of the term revolving loan becomes due. As of June 30, 2016, we had $0 outstanding on our term revolving loan and $20,000,000 available to be drawn. Interest accrued on our term revolving loan as of June 30, 2016 at a rate of 3.536% per year.

If we fail to make a payment of principal or interest on our loan within 10 days of the due date, there will be a late charge equal to 5% of the amount of the payment.

Covenants

In connection with the Master Loan Agreement, we are required to maintain working capital of at least $27.5 million. This is our only material financial covenant. As of June 30, 2016, we were in compliance with our working capital covenant. Our actual working capital as of June 30, 2016 was approximately $67.6 million. Management anticipates that we will be in compliance with all of our debt covenants and financial ratios for at least the next 12 months.

Failure to comply with the loan covenants or to maintain the required financial ratios may cause acceleration of any future outstanding principal balances on the loans and/or the imposition of fees, charges or penalties. Any acceleration of the debt financing or imposition of the fees, charges or penalties may restrict or limit our access to the capital resources necessary to continue plant operations.

Should we default on any of our obligations pursuant to the Home Federal loans, Home Federal may terminate its commitment to provide us funds and declare any future unpaid principal balance of the loans, plus accrued interest, immediately due and payable. Events of default include the failure to make payments when due, our insolvency, any material adverse change in our financial condition or the breach of any of the covenants, representations or warranties we have made in the loan agreements.

Application of Critical Accounting Estimates

Management uses estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles.  These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.  Of the significant accounting policies described in the notes to our financial statements, we believe that the following are the most critical:

Derivative Instruments

The Company evaluates its contracts to determine whether the contracts are derivative instruments. Certain contracts that literally meet the definition of a derivative my be exempted from derivative accounting as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from the accounting and reporting requirements of derivative accounting.

The Company enters into short-term cash, option and futures contracts as a means of securing purchases of corn, natural gas and sales of ethanol for the plant and managing exposure to changes in commodity and energy prices. All of the Company's derivatives are designated as non-hedge derivatives for accounting purposes, with changes in fair value recognized in net income. Although the contracts are economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of its trading activity, the Company uses futures and option contracts through regulated commodity exchanges to manage its risk related to pricing of inventories. To reduce that risk, the Company generally rakes positions using cash and futures contracts and options.

Realized and unrealized gains and losses related to derivative contracts related to corn and natural gas are included as a component of cost of goods sold and derivative contracts related to ethanol are included as a component of revenues in the accompanying financial statements. The fair values of all contracts with the same counter party are presented net on the accompanying balance sheet as derivative instruments net of cash due from/to broker.

Revenue recognition

Revenue from the sale of the Company's products is recognized at the time title to the goods and all risks of ownership transfer to the customers. This generally occurs upon shipment, loading of the goods or when the customer picks up the goods.

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Interest income is recognized as earned. Shipping costs incurred by the Company in the sale of ethanol and distiller grains are not specifically identifiable and as a result, revenue from the sale of ethanol and distiller grains is recorded based on the net selling price reported to the Company from the marketer.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to the impact of market fluctuations associated with commodity prices as discussed below. We have no exposure to foreign currency risk as all of our business is conducted in U.S. Dollars and we have no amounts outstanding on variable interest rate debt. We use derivative financial instruments as part of an overall strategy to manage market risk. We use cash, futures and option contracts to hedge changes to the commodity prices of corn, natural gas and ethanol. We do not enter into these derivative financial instruments for trading or speculative purposes, nor do we designate these contracts as hedges for accounting purposes.

Commodity Price Risk

We seek to minimize the risks from fluctuations in the prices of raw material inputs, such as corn and natural gas, and finished products, such as ethanol and distiller grains, through the use of hedging instruments. In practice, as markets move, we actively manage our risk and adjust hedging strategies as appropriate. Although we believe our hedge positions accomplish an economic hedge against our future purchases and sales, management has chosen not to use hedge accounting, which would match the gain or loss on our hedge positions to the specific commodity purchase being hedged. We are using fair value accounting for our hedge positions, which means as the current market price of our hedge positions changes, the realized or unrealized gains and losses are immediately recognized in our cost of goods sold or as an offset to revenues. The immediate recognition of hedging gains and losses under fair value accounting can cause net income to be volatile from quarter to quarter due to the timing of the change in value of the derivative instruments relative to the cost and use of the commodity being hedged.

As of June 30, 2016, we had price protection in place for approximately 11% of our anticipated corn needs, 17% of our natural gas needs and 0% of our ethanol sales for the next 12 months. A sensitivity analysis has been prepared to estimate our exposure to ethanol, corn and natural gas price risk. Market risk related to these factors is estimated as the potential change in income resulting from a hypothetical 10% adverse change in the average cost of our corn and natural gas prices and average ethanol price as of June 30, 2016, net of the forward and future contracts used to hedge our market risk for corn and natural gas usage requirements. The volumes are based on our expected use and sale of these commodities for a one year period from June 30, 2016. The results of this analysis, which may differ from actual results, are as follows:

	Estimated Volume Requirements for the next 12 months (net of forward and futures contracts)	Unit of Measure	Hypothetical Adverse Change in Price	Approximate Adverse Change to income
Natural Gas	3,154,000	MMBTU	10%	$	(777,493	)
Ethanol	145,000,000	Gallons	10%	(21,460,000		)
Corn	43,610,000	Bushels	10%	(14,478,520		)

For comparison purposes, our sensitivity analysis for our second quarter of 2015 is set forth below.

	Estimated Volume Requirements for the next 12 months (net of forward and futures contracts)	Unit of Measure	Hypothetical Adverse Change in Price	Approximate Adverse Change to income
Natural Gas	3,456,000	MMBTU	10%	$	(869,508	)
Ethanol	132,300,000	Gallons	10%	(19,712,700		)
Corn	44,650,000	Bushels	10%	(15,440,440		)

ITEM 4. CONTROLS AND PROCEDURES.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and

22

that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.

Our management, including our President and Chief Executive Officer (the principal executive officer), James Broghammer, along with our Chief Financial Officer, (the principal financial officer), David Finke, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2016. Based on this review and evaluation, these officers believe that our disclosure controls and procedures are effective in ensuring that material information related to us is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission.

For the fiscal quarter ended June 30, 2016, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS.

Retterath Florida Lawsuit

On August 1, 2013, Steve Retterath, the Company's largest investor and a former member of the Company's board of directors filed a lawsuit in the Florida Circuit Court located in Palm Beach County, Florida. The lawsuit was subsequently removed to federal court in Florida. In the lawsuit, Mr. Retterath sued the Company, Pat Boyle, Maurice Hyde, Christine Marchand, Mathew Driscoll, Leslie Hansen, and Chad Kuhlers, each members of the Company's board of directors, Walter Wendland, the Company's former Chief Executive Officer, David Finke, the Company's Chief Financial Officer and Kevin Howes, the Company's Chief Operating Officer. Mr. Retterath also sued James Boeding, a former director and the Company's outside legal counsel, Joseph Leo and the BrownWinick Law Firm. Mr. Retterath is claiming that certain actions taken by the Company violated fiduciary duties owed to him as a member or fraudulently induced him to take certain actions. Mr. Retterath is also claiming violations of state and federal securities laws and violations of Florida's deceptive and unfair trade practices statutes. Mr. Retterath claims an unspecified damage in excess of $30 million in monetary damages. The Florida court ruled in favor of the Company's motion to transfer the case to Iowa. Each of the defendants filed motions to dismiss the lawsuit and Mr. Retterath filed a motion for partial summary judgment in the case. The Federal Court in Iowa ruled in favor of the defendants and dismissed the federal claims in this lawsuit. Further, the Federal Court declined jurisdiction to hear the other state law matters in the case and remanded those claims back to Florida state court.

                On August 21, 2014, Jason Retterath and Annie Retterath, the son and daughter-in-law of Steve Retterath, filed a motion to intervene in the lawsuit to protect their interests as members of the Company. The Company filed a motion to dismiss the intervenor petition. The Federal Court in Iowa declined to consider the Company's motion to dismiss the intervention and instead remanded the intervenors’ case back to Florida state court.

Recently, all of the defendants in the case filed motions to dismiss the claims filed by Mr. Retterath and his son and daughter-in-law. This issue has been fully briefed by the parties and a hearing is scheduled for August 18, 2016.

Retterath Iowa Lawsuit

On August 14, 2013, the Company filed a lawsuit against Steve Retterath in the Iowa state court located in Polk County, Iowa. The purpose of the lawsuit is to enforce the terms of the repurchase agreement the Company executed with Mr. Retterath on June 13, 2013. The Company is asking the Iowa state court to require Mr. Retterath to perform his obligations under the repurchase agreement pursuant to its terms. Mr. Retterath removed the case to federal court in the Federal District Court for the Southern District of Iowa in December 2013. The Company believed that this removal was improper and as a result the Company moved to remand the case back to the Iowa state court in Polk County which was granted. Mr. Retterath answered the lawsuit in August 2014, denying the validity of the repurchase agreement. In addition, the Iowa state court permitted Jason Retterath and Annie Retterath, the son and daughter-in-law of Steve Retterath, to be added as parties to the Iowa state lawsuit. In February 2015, the Company filed a motion for summary judgment asking the Iowa state court to enforce the repurchase agreement. The Retteraths also filed motions for summary judgment asking the Iowa state court to find the repurchase agreement invalid. On October 16, 2015, the Iowa state court entered a ruling granting Homeland's motion for summary judgment and determined no membership vote was required as Mr. Retterath has contended. The Iowa state court also denied the summary judgment motions filed by Mr. Retterath and his son and daughter-in-law. The parties are currently conducting discovery and have a trial scheduled for January 2017.

23

Recently, Mr. Retterath and his son and daughter-in-law filed a motion to add a significant number of additional parties to the Iowa lawsuit along with additional claims against the Company. We filed a resistance to Mr. Retterath's attempts to expand the scope of the Iowa lawsuit. The Iowa court granted the motions filed by Mr. Retterath and his son and daughter-in-law.

GS Cleantech Patent Litigation

On August 9, 2013, GS Cleantech Corporation ("GS Cleantech"), a subsidiary of Greenshift Corporation, filed a complaint in the United States District for the Northern District of Iowa against the Company. The Company is one of more than twenty ethanol manufacturers that were sued by GS Cleantech. The complaint alleges that the Company's operation of a corn oil extraction process infringes patent rights claimed by GS Cleantech. GS Cleantech seeks royalties, damages and potentially triple damages associated with the alleged infringement, as well as attorney's fees. The complaint was transferred to the United States District Court for the Southern District of Indiana due to a finding that the action involves questions of fact common to several other lawsuits which were joined in a multi-district litigation ("MDL"). The MDL Court developed two tracks of defendants in this litigation. The first track includes defendants which were originally sued by GS Cleantech in 2010 and a second track of defendants sued in 2013 which includes the Company. On October 23, 2014, the MDL Court granted summary judgment in favor of the first track defendants and found that the GS Cleantech patents which the Company is alleged to have infringed are invalid. Further, in a January 16, 2015 decision, the MDL ruled in favor of a stipulated motion for partial summary judgment finding that all of the GS Cleantech patents in the suit were invalid and, therefore, not infringed.  GS Cleantech has said it will appeal this decision when the remaining claim in the suit has been decided.  If GS Cleantech successfully appeals the District Court’s findings of invalidity, damages awarded GS Cleantech may be $1 million or more.

The only remaining claim in the lawsuit alleges that GS Cleantech inequitably conducted itself before the United States Patent Office when obtaining the patents at issue. A trial in the District Court for the Southern District of Indiana on the single issue of inequitable conduct was held in October 2015 and the Company is currently awaiting the MDL Court's decision. If the defendants, including the Company, succeed in proving inequitable conduct, the patents at issue will be rendered unenforceable as will certain additional patents. No damages for infringement of an unenforceable patent can be awarded. Further, if the defendants successfully prove inequitable conduct, they will ask the Court to find the case exceptional and award the defendants their attorneys' fees. It is unknown whether GS Cleantech would appeal such a ruling.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors which were included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2015.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION.

None.

24

ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)    The following exhibits are filed as part of this report.

Exhibit No.	Exhibit
31.1	Certificate Pursuant to 17 CFR 240.13a-14(a)*
31.2	Certificate Pursuant to 17 CFR 240.13a-14(a)*
32.1	Certificate Pursuant to 18 U.S.C. Section 1350*
32.2	Certificate Pursuant to 18 U.S.C. Section 1350*
101	The following financial information from Homeland Energy Solutions, LLC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Balance Sheets as of June 30, 2016 and December 31, 2015, (ii) Statements of Operations for the three and six months ended June 30, 2016 and 2015, (iii) Statements of Cash Flows for the six months ended June 30, 2016 and 2015, and (iv) the Notes to Unaudited Financial Statements.**

________________________________

(*) Filed herewith.

(**) Furnished herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		HOMELAND ENERGY SOLUTIONS, LLC
Date:	August 12, 2016	/s/ James Broghammer
		James Broghammer
		President and Chief Executive Officer (Principal Executive Officer)
Date:	August 12, 2016	/s/ David A. Finke
		David A. Finke
		Treasurer/Chief Financial Officer (Principal Financial Officer)

25

EX-31.1

CERTIFICATIONS

I, James Broghammer, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Homeland Energy Solutions, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 12, 2016	/s/ James Broghammer
		James Broghammer, Chief Executive Officer

EX-31.2

CERTIFICATIONS

I, David A. Finke, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Homeland Energy Solutions, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 12, 2016	/s/ David A. Finke
		David A. Finke, Chief Financial Officer

EX-32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report on Form 10-Q of Homeland Energy Solutions, LLC (the “Company”) for the fiscal quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James Broghammer, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	August 12, 2016	/s/ James Broghammer
		James Broghammer,
		Chief Executive Officer

EX-32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report on Form 10-Q of Homeland Energy Solutions, LLC (the “Company”) for the fiscal quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David A. Finke, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	August 12, 2016	/s/ David A. Finke
		David A. Finke,
		Chief Financial Officer

XML

Document and Entity Information Document - shares	6 Months Ended
	Jun. 30, 2016	Aug. 12, 2016
Document Information [Line Items]
Entity Registrant Name	HOMELAND ENERGY SOLUTIONS LLC
Entity Central Index Key	0001366744
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		64,585

XML

Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
CURRENT ASSETS
Cash and cash equivalents	$ 24,778,119	$ 20,256,678
Trading securities	41,649,829	40,730,621
Accounts receivable	3,612,579	4,875,102
Inventory	9,150,688	7,653,149
Prepaid and other	2,452,879	2,382,674
Derivative instruments	2,261,370	705,549
Total current assets	83,905,464	76,603,773
PROPERTY AND EQUIPMENT
Land and improvements	22,539,771	22,539,771
Buildings	5,817,054	5,684,546
Equipment	151,511,702	149,732,809
Construction in progress	7,732,799	2,518,695
Gross property and equipment	187,601,326	180,475,821
Less accumulated depreciation	80,271,730	74,755,593
Total property and equipment	107,329,596	105,720,228
OTHER ASSETS
Utility rights, net of amortization of $1,251,023 and $1,182,829	1,057,006	1,125,200
Other assets	3,301,012	3,543,028
Total other assets	4,358,018	4,668,228
TOTAL ASSETS	195,593,078	186,992,229
CURRENT LIABILITIES
Accounts payable	4,571,515	6,522,326
Due to former member	30,000,000	30,000,000
Accrued Expenses	668,141	1,139,020
Total current liabilities	35,239,656	37,661,346
COMMITMENTS AND CONTINGENCIES
LONG-TERM LIABILITIES
Other liabilities	157,992	350,059
Total long-term liabilities	157,992	350,059
MEMBERS' EQUITY (64,585 units issued and outstanding)	160,195,430	148,980,824
TOTAL LIABILITIES AND MEMBERS' EQUITY	$ 195,593,078	$ 186,992,229

XML

Balance Sheets Parenthetical - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Other Assets:
Utility rights, net of amortization	$ 1,251,023	$ 1,182,829
MEMBERS’ EQUITY
Members Capital units issued and outstanding	64,585	64,585

XML

Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue	$ 70,146,120	$ 72,749,789	$ 131,456,869	$ 134,419,822
Costs of goods sold	61,077,982	63,524,613	119,810,495	122,288,399
Gross profit	9,068,138	9,225,176	11,646,374	12,131,423
Selling, general and administrative expenses	736,312	925,185	1,570,767	1,869,458
Operating income	8,331,826	8,299,991	10,075,607	10,261,965
Other Income (expense)
Interest income	2,423	12,319	4,777	18,048
Other Income	406,991	32,991	1,134,222	657,445
Total other income	409,414	45,310	1,138,999	675,493
Net income	$ 8,741,240	$ 8,345,301	$ 11,214,606	$ 10,937,458
Basic & diluted net income per capital unit	$ 135.34	$ 129.21	$ 173.64	$ 169.35
Weighted average number of units outstanding for the calculation of basic & diluted net income per capital unit	64,585	64,585	64,585	64,585

XML

Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 11,214,606	$ 10,937,458
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,584,331	5,263,084
Unrealized (gain) loss on risk managment activities	(1,555,821)	1,939,753
Unrealized (gain) on trading securities activities	(919,208)	(259,569)
Change in working capital components:
Accounts receivable	1,262,523	(3,196,701)
Inventory	(1,497,539)	(1,043,850)
Prepaid and other	(70,205)	201,163
Accounts payable and other accrued expenses	(2,657,757)	(5,008,052)
Net cash provided by operating activities	11,360,930	8,833,286
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of trading securities	0	(8,254,031)
Payments for equipment and construction in progress	(7,081,505)	(4,670,748)
Decrease (Increase) in other assets	242,016	(176,048)
Net cash (used in) investing activities	(6,839,489)	(13,100,827)
CASH FLOWS FROM FINANCING ACTIVITIES
Distribution to members	0	(9,816,920)
Net cash (used in) financing activities	0	(9,816,920)
Net increase (decrease) in cash and cash equivalents	4,521,441	(14,084,461)
Cash and Cash Equivalents - Beginning	20,256,678	32,522,840
Cash and Cash Equivalents - Ending	24,778,119	18,438,379
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accounts payable related to property and equipment	$ 44,000	$ 0

XML

Nature of Business and Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Nature of Business and Significant Accounting Policies [Abstract]

Nature of Business and Significant Accounting Policies

Nature of Business and Significant Accounting Policies

The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company's audited financial statements for the year ended December 31, 2015, contained in the Company's annual report on Form 10-K for 2015.

In the opinion of management, the interim condensed financial statements reflect all adjustments considered necessary for fair presentation. The adjustments made to these statements consist only of normal recurring adjustments.

Nature of Business

Homeland Energy Solutions, LLC (an Iowa Limited Liability Company) is located near Lawler, Iowa and was organized to pool investors for a 100 million gallon ethanol plant with distribution primarily throughout the United States. The Company has capacity to produce in excess of 145 million gallons annually and sells distillers dried grains and corn oil as byproducts of ethanol production.

Organization

Homeland Energy Solutions, LLC is organized as an Iowa limited liability company. The members' liability is limited as specified in Homeland Energy Solutions' operating agreement and pursuant to the Iowa Revised Uniform Limited Liability Company Act.

Significant Accounting Policies:

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with United States Generally Accepted Accounting Principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Cash & Cash Equivalents

The Company maintains its accounts primarily at one financial institution. At various times, the Company's cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced losses in such accounts.

Trading Securities

Investments bought and held principally for the purpose of selling them in the the near term are classified as trading securities. Trading securities are measured at fair value using prices obtained from pricing services. Any interest, dividends, and unrealized or realized gains and losses on the trading securities are recorded as part of other income (expense).

At December 31, 2015, trading securities consisted of short term bond mutual funds with an approximate cost of $41,157,000 and fair value of $40,731,000, respectively. At June 30, 2016, trading securities consisted of short term bond mutual funds with an approximate cost of $41,476,000 and fair value of $41,650,000, respectively. For the three and six months ended June 30, 2016 the Company recorded interest, dividend and net unrealized gains and losses from these investments of approximately $376,000 and $919,000, respectively. During the same time periods of 2015 the Company recorded interest, dividends and net unrealized gains and losses from these investments of approximately $7,000 and $260,000, respectively.

The Board of Directors voted to set aside up to $30 million in trading securities that will be used by the Company for the repurchase of 25,860 membership units held by Steve Retterath per the terms of an agreement with Mr. Retterath entered into on June 13, 2013 by the Company.

Receivables

Credit sales are made primarily to one customer and no collateral is required. The Company carries these accounts receivable at original invoice amount with no allowance for doubtful accounts due to the historical collection rates on these accounts.

Investments

The Company has a less than 20% investment interest in Renewable Products Marketing Group, LLC (RPMG). This investment is being accounted for under the equity method of accounting under which the Company's share of net income is recognized as income in the Company's statement of operations and added to the investment account. The investment balance is included in other assets and the income recognized as other income. The investment is evaluated for indications of impairment on a regular basis. A loss would be recognized when the fair value is determined to be less than the carrying value.

Revenue and Cost Recognition

Revenue from the sale of the Company's products is recognized at the time title to the goods and all risks of ownership transfer to the customers.  This generally occurs upon shipment, loading of the goods or when the customer picks up the goods. Interest income is recognized as earned. Shipping costs incurred by the Company in the sale of ethanol and distiller grains are not specifically identifiable and as a result, revenue from the sale of ethanol and distiller grains is recorded based on the net selling price reported to the Company from the marketer. Rail car lease costs incurred by the Company in the sale and shipment of distiller grain products are included in the cost of goods sold.

Inventories

Inventories are generally valued at the lower of cost (first-in, first-out) or net realizable value.  In the valuation of inventories and purchase and sale commitments, net realizable value is defined as estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.

Property & Equipment

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of the asset group may not be recoverable. If circumstances require a long-lived asset be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by the asset group to the carrying value of the asset group. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

Derivative Instruments

The Company evaluates its contracts to determine whether the contracts are derivative instruments. Certain contracts that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from the accounting and reporting requirements of derivative accounting.

The Company enters into short-term cash, option and futures contracts as a means of securing purchases of corn, natural gas and sales of ethanol for the plant and managing exposure to changes in commodity and energy prices. All of the Company's derivatives are designated as non-hedge derivatives for accounting purposes, with changes in fair value recognized in net income. Although the contracts are economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of its trading activity, the Company uses futures and option contracts through regulated commodity exchanges to manage its risk related to pricing of inventories. To reduce that risk, the Company generally takes positions using cash and futures contracts and options.

Realized and unrealized gains and losses related to derivative contracts related to corn and natural gas are included as a component of cost of goods sold and derivative contracts related to ethanol are included as a component of revenue in the accompanying financial statements. The fair values of contracts entered through commodity exchanges are presented on the accompanying balance sheet as derivative instruments. All contracts with the same counter party are reported on a net basis.

Committed Shares to be Redeemed

On June 13, 2013, the Company entered into an agreement with Steve Retterath, the Company's largest member, to repurchase and retire all of the membership units owned by Mr. Retterath. The Company agreed to close on this repurchase on or before August 1, 2013. The Company agreed to repurchase and retire 25,860 membership units owned by Mr. Retterath in exchange for $30 million, to be paid in two equal installments payable at closing and on July 1, 2014. The transaction failed to close by the scheduled date due to objections by Mr. Retterath. Due to all conditions of the agreement being met prior to, or on, August 1, 2013, the Company believes that it has a binding agreement with Mr. Retterath; as such the commitment to repurchase and retire the membership units is reflected in the financial statements as a current liability, due to former member, as if the transaction had closed on August 1, 2013. See Note 9 for additional information.

Net Income per Unit

Basic and diluted net income per unit is computed by dividing net income by the weighted average number of members' units and members' unit equivalents outstanding during the period. There were no member unit equivalents outstanding during the periods presented; accordingly, the Company's basic and diluted net income per unit are the same.

Prior to, or on, August 1, 2013, the Company believes it has a binding agreement with Steve Retterath to repurchase and retire all 25,860 membership units owned by Mr. Retterath. These membership units have thus been excluded in the determination of net income per capital unit as presented in the Statement of Operations. The Company is currently involved in litigation with Mr. Retterath. There is potential that Mr. Retterath will continue as a unit holder upon conclusion of the litigation and said membership units would not be redeemed under the repurchase agreement. If the units are not redeemed, basic and diluted net income per unit, including the 25,860 units, for the three and six months ended June 30, 2016 would be $96.65 and $123.99, respectively. Net income per unit for the three and six months ended June 30, 2015 would have been $92.27 and $120.93, respectively.

Risks and Uncertainties

The Company has certain risks and uncertainties that it will experience during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol, distiller grains and corn oil to customers primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. For the six months ended June 30, 2016, ethanol sales averaged approximately 78% of total revenues, while approximately 18% of revenues were generated from the sale of distiller grains. Corn oil sales attributed for approximately 4% of revenues during this time period. For the six months ended June 30, 2016, corn costs averaged approximately 81% of cost of goods sold.

The Company's operating and financial performance is largely driven by the prices at which ethanol is sold and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, and government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities.

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Inventory

6 Months Ended

Jun. 30, 2016

Inventory [Abstract]

Inventory

INVENTORY

Inventory consisted of the following as of June 30, 2016 and December 31, 2015.

	June 30, 2016		December 31, 2015
Raw Materials	$	5,644,883	$	5,030,182
Work in Process	1,399,405		1,428,646
Finished Goods	2,106,400		1,194,321
Totals	$	9,150,688	$	7,653,149

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Debt

6 Months Ended

Jun. 30, 2016

Debt [Abstract]

Debt

DEBT

Master Loan Agreement with Home Federal Savings Bank

On November 30, 2007, the Company entered into a Master Loan Agreement with Home Federal Savings Bank ("Home Federal") establishing a senior credit facility with Home Federal for the construction of a 100 million gallon per year natural gas powered dry mill ethanol plant. In return, the Company executed a mortgage in favor of Home Federal creating a senior lien on the real estate and plant and a security interest in all personal property located on Company property. The Company currently has a term revolving loan with Home Federal.

Term Revolving Loan

Under the terms of the Master Loan Agreement, the Company has a $20 million term revolving loan which has a maturity date of August 1, 2018. Interest on the term revolving loan accrues at a rate equal to the one month LIBOR plus 310 basis points, 3.536% on June 30, 2016. The Company is required to make monthly payments of interest until the maturity date of the term revolving loan on August 1, 2018, on which date the unpaid principal balance of the term revolving loan becomes due. There was no balance outstanding on the term revolving loan and $20 million available to be drawn as of June 30, 2016 and December 31, 2015.

Covenants

During the term of the Loans, the Company is subject to certain financial covenants at various times calculated monthly, quarterly or annually, including restriction of the payment of dividends and capital expenditures and maintenance of certain financial ratios including the minimum working capital and a fixed charge ratio as defined by the Master Loan Agreement. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the loans and/or the imposition of fees, charges or penalties.

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Related Party Transactions

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Due to former member

On June 13, 2013, we entered into an agreement with Steve Retterath, the Company's largest member, to repurchase and retire all of the units owned by Mr. Retterath. The Company agreed to close on this repurchase on or before August 1, 2013. The Company agreed to repurchase and retire 25,860 membership units owned by Mr. Retterath in exchange for $30 million, to be paid in two equal installments payable at closing and on July 1, 2014. The transaction failed to close by the scheduled date due to objections by Mr. Retterath. The Company believes that it has a binding agreement with Mr. Retterath. On August 14, 2013, the Company filed a lawsuit against Mr. Retterath in Iowa state court to enforce the terms of the repurchase agreement. The Company is asking the Iowa state court to require Mr. Retterath to complete the repurchase agreement pursuant to its terms.

Mr. Retterath contends he is not bound by the agreement.  The Company's position is as of the closing date, Mr. Retterath is no longer the equitable owner of any membership units in the Company. As a result, in 2013 the Company recorded a $30 million short-term liability related to the amount the Company agreed to pay Mr. Retterath to repurchase his membership units and correspondingly reduced members' equity on the balance sheet. If the Company is ultimately unsuccessful in its lawsuit against Mr. Retterath, the Company will reevaluate the accounting considerations made during the period of time that the lawsuit is pending.

Other matters

The Company has purchased corn and materials from members of its Board of Directors who own or manage elevators or are local producers of corn. Purchases during the three and six months ended June 30, 2016 totaled approximately $2,584,000 and $4,381,000 and during the three and six months ended June 30, 2015 totaled approximately $991,000 and $3,194,000 respectively. Amounts due to these members was $0 at June 30, 2016 and December 31, 2015.

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Commitments, Contingencies and Agreements

6 Months Ended

Jun. 30, 2016

Commitments, Contingencies and Agreements [Abstract]

Commitments and Contingencies and Agreements

COMMITMENTS, CONTINGENCIES AND AGREEMENTS

Ethanol, corn oil, and distiller grains marketing agreements and major customers

The Company has entered into a marketing agreement with RPMG, a related party, to sell all ethanol produced at the plant at a mutually agreed on price, less commission and transportation charges. As of June 30, 2016, the Company had commitments to sell approximately 6 million of its produced gallons of ethanol at various fixed prices and 30 million of its produced gallons of ethanol at basis price levels indexed against exchanges for delivery through September 30, 2016.

The Company has entered into a marketing agreement with RPMG to sell all corn oil produced at the plant at a mutually agreed on price, less marketing fees and transportation charges. As of June 30, 2016, the Company had commitments to sell approximately 2 million pounds of corn oil at various fixed and basis price levels indexed against exchanges for delivery through July 31, 2016.

The Company also has an investment in RPMG, included in other assets, totaling approximately $2,468,000 as of June 30, 2016.

The Company has entered into a marketing agreement to sell all distiller grains produced at the plant to CHS, an unrelated party, at a mutually agreed on price, less commission and transportation charges. The agreement was renewed for another one year term on April 1, 2016. The agreement calls for automatic renewal for successive one-year terms unless 90-day prior written notice is given before the current term expires. As of June 30, 2016, the Company had approximately 35,000 tons of distiller grains commitments for delivery through August 2016 at various fixed prices.

Sales and marketing fees related to the agreements in place for the three and six months months ended June 30, 2016 and 2015 were approximately as follows:

	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
	June 30, 2016		June 30, 2016		June 30, 2015		June 30, 2015
Sales ethanol	$	55,245,000	$	102,235,000	$	53,236,000	$	97,532,000
Sales distiller grains	12,040,000		24,033,000		17,176,000		32,515,000
Sales corn oil	2,860,000		5,188,000		2,338,000		4,373,000
Marketing fees ethanol	$	42,000	$	84,000	$	42,000	$	84,000
Marketing fees distiller grains	189,000		395,000		205,000		366,000
Marketing fees corn oil	25,000		50,000		25,000		46,000
					As of June 30, 2016		As of December 31, 2015
Amount due from RPMG					$	1,770,000	$	3,641,000
Amount due from CHS					1,661,000		1,179,000

At June 30, 2016, the Company had approximately $24,797,000 in outstanding priced corn purchase commitments for bushels at various prices and approximately 1.82 million bushels of basis contracts through July 2017 accounted for under the normal purchase exclusion.

The Company has commitments for minimum purchases of various utilities such as electricity over the next 3 years, accounted for under the normal purchase exclusion, which are anticipated to approximate the following for the twelve month periods ending June 30:

2017	$	3,787,000
2018	3,787,000
2019	2,841,000
Total anticipated commitments	$	10,415,000

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Lease Obligations

6 Months Ended

Jun. 30, 2016

Lease Obligations [Abstract]

Lease Obligations

LEASE OBLIGATIONS

The Company leases rail cars and rail moving equipment with original terms up to 5 years. The Company is obligated to pay costs of insurance, taxes, repairs and maintenance pursuant to the terms of the leases. Rent expense incurred for the operating leases during the three and six months ended June 30, 2016 was approximately $415,000 and $830,000, respectively, and for the same periods in 2015 was approximately $402,000 and $818,000, respectively.

At June 30, 2016, the Company had the following approximate minimum rental commitments under non-cancelable operating leases for the twelve month periods ended June 30:

2017	$	1,435,000
2018	413,000
Total lease commitments	$	1,848,000

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Derivative Instruments

6 Months Ended

Jun. 30, 2016

Derivative Instruments [Abstract]

Derivative Instruments

    DERIVATIVE INSTRUMENTS

The Company's activities expose it to a variety of market risks, including the effects of changes in commodity prices. These financial exposures are monitored and managed by the Company as an integral part of its overall risk-management program. The Company's risk management program focuses on the unpredictability of financial and commodities markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results.

To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange traded futures and options contracts to reduce its net position of merchandisable agricultural commodity inventories and forward cash purchase and sales contracts and uses exchange traded futures and options contracts to reduce price risk. Exchange-traded futures contracts are valued at market price. Changes in market price of exchange traded futures and options contracts related to corn and natural gas are recorded in costs of goods sold and changes in market prices of contracts related to the sale of ethanol, if applicable, are recorded in revenues.

The Company uses futures or options contracts to fix the purchase price of anticipated volumes of corn to be purchased and processed in a future month. The Company's plant will grind approximately 49 million bushels of corn per year.  During the previous period and over the next 12 months, the Company has hedged and anticipates hedging between 5% and 60% of its anticipated monthly grind.  At June 30, 2016, the Company has hedged portions of its anticipated monthly purchases for corn averaging approximately 11% of its anticipated monthly grind over the next twelve months.

The following table represents the approximate amount of realized/unrealized gains (losses) and changes in fair value recognized in earnings on commodity contracts for the three and six months ending June 30, 2016 and 2015 and the fair value of derivatives as of June 30, 2016 and December 31, 2015:

	Income Statement Classification	Realized Gain (Loss)			Change In Unrealized Gain (Loss)			Total Gain (Loss)
Derivatives not designated as hedging instruments:
Commodity contracts for the
three months ended June 30, 2016	Cost of Goods Sold	$	(545,000	)	$	1,850,000		$	1,305,000
Commodity contracts for the
three months ended June 30, 2015	Cost of Goods Sold	$	1,048,000		$	(3,090,000	)	$	(2,042,000	)
Commodity contracts for the
six months ended June 30, 2016	Cost of Goods Sold	$	(29,000	)	$	2,356,000		$	2,327,000
Commodity contracts for the
six months ended June 30, 2015	Cost of Goods Sold	$	1,536,000		$	(2,624,000	)	$	(1,088,000	)

	Balance Sheet Classification	June 30, 2016			December 31, 2015
Futures contracts through March 2017
In gain position		$	2,818,000		$	462,000
Cash (owed to) held by broker		(557,000		)	244,000
	Current Asset	$	2,261,000		$	706,000

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Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Measurements [Abstract]

Fair Value Disclosures [Text Block]

    FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth below:

Trading securities: Trading securities consisting of corporate bonds and short term bond mutual funds are reported at fair value utilizing Level 1 inputs. Trading securities are measured at fair value using prices obtained from pricing services.

Derivative financial instruments: Commodity futures and exchange-traded commodity options contracts are reported at fair value utilizing Level 1 inputs. For these contracts, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the CBOT and NYMEX markets. 

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Total		Level 1		Level 2		Level 3
As of June 30, 2016
Trading securities	$	41,650,000	$	41,650,000	$	—	$	—
Derivative financial instruments	$	2,818,000	$	2,818,000	$	—	$	—
As of December 31, 2015
Trading securities	$	40,731,000	$	40,731,000	$	—	$	—
Derivative financial instruments	$	462,000	$	462,000	$	—	$	—

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Litigation Matters

6 Months Ended

Jun. 30, 2016

Litigations Matters [Abstract]

Litigation Matters

LITIGATION MATTERS

Retterath

In relation to the repurchase agreement discussed in Note 4, on August 1, 2013 Mr. Retterath filed a lawsuit against the Company along with several directors, the Company's former CEO, CFO, COO, a former director and the Company's outside legal counsel in Florida state court. Mr. Retterath is claiming that certain actions taken by the Company violated fiduciary duties owed to him as a member or fraudulently induced him to take certain actions. Mr. Retterath is also claiming violations of state and federal securities laws and violations of Florida's deceptive and unfair trade practices statutes. On August 14, 2013, the Company filed a lawsuit in Iowa state court to enforce the repurchase agreement the Company entered into with Mr. Retterath. No distributions have been paid to Mr. Retterath since the time of the original expected closing date of August 1, 2013.

GS Cleantech Corporation

On August 9, 2013, GS Cleantech Corporation (GS Cleantech), a subsidiary of Greenshift Corporation, filed a complaint against the Company alleging that the Company's operation of a corn oil extraction process licensed by the Company infringes patent rights claimed by GS Cleantech. GS Cleantech seeks royalties, damages and potentially triple damages associated with the alleged infringement, as well as attorney's fees from the Company. The Company filed a motion for summary judgment which was granted by the Court. The Company expects GS Cleantech will appeal this decision. The Company has filed an answer and counterclaims claiming invalidity of the patents, noninfringement, and inequitable conduct. The Company is not currently able to predict the outcome of the litigation with any degree of certainty.

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Accounting Policies

6 Months Ended

Jun. 30, 2016

Nature of Business and Significant Accounting Policies [Abstract]

Accounting Estimates

Accounting Estimates

Management uses estimates and assumptions in preparing these financial statements in accordance with United States Generally Accepted Accounting Principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash & Cash Equivalents

The Company maintains its accounts primarily at one financial institution. At various times, the Company's cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced losses in such accounts.

Trading Securities

Trading Securities

Investments bought and held principally for the purpose of selling them in the the near term are classified as trading securities. Trading securities are measured at fair value using prices obtained from pricing services. Any interest, dividends, and unrealized or realized gains and losses on the trading securities are recorded as part of other income (expense).

At December 31, 2015, trading securities consisted of short term bond mutual funds with an approximate cost of $41,157,000 and fair value of $40,731,000, respectively. At June 30, 2016, trading securities consisted of short term bond mutual funds with an approximate cost of $41,476,000 and fair value of $41,650,000, respectively. For the three and six months ended June 30, 2016 the Company recorded interest, dividend and net unrealized gains and losses from these investments of approximately $376,000 and $919,000, respectively. During the same time periods of 2015 the Company recorded interest, dividends and net unrealized gains and losses from these investments of approximately $7,000 and $260,000, respectively.

The Board of Directors voted to set aside up to $30 million in trading securities that will be used by the Company for the repurchase of 25,860 membership units held by Steve Retterath per the terms of an agreement with Mr. Retterath entered into on June 13, 2013 by the Company.

Receivables

Receivables

Credit sales are made primarily to one customer and no collateral is required. The Company carries these accounts receivable at original invoice amount with no allowance for doubtful accounts due to the historical collection rates on these accounts.

Investments

Investments

The Company has a less than 20% investment interest in Renewable Products Marketing Group, LLC (RPMG). This investment is being accounted for under the equity method of accounting under which the Company's share of net income is recognized as income in the Company's statement of operations and added to the investment account. The investment balance is included in other assets and the income recognized as other income. The investment is evaluated for indications of impairment on a regular basis. A loss would be recognized when the fair value is determined to be less than the carrying value.

Revenue and Cost Recognition

Revenue and Cost Recognition

Revenue from the sale of the Company's products is recognized at the time title to the goods and all risks of ownership transfer to the customers.  This generally occurs upon shipment, loading of the goods or when the customer picks up the goods. Interest income is recognized as earned. Shipping costs incurred by the Company in the sale of ethanol and distiller grains are not specifically identifiable and as a result, revenue from the sale of ethanol and distiller grains is recorded based on the net selling price reported to the Company from the marketer. Rail car lease costs incurred by the Company in the sale and shipment of distiller grain products are included in the cost of goods sold.

Inventories

Inventories

Inventories are generally valued at the lower of cost (first-in, first-out) or net realizable value.  In the valuation of inventories and purchase and sale commitments, net realizable value is defined as estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.

Property & Equipment

Property & Equipment

The Company reviews its property and equipment for impairment whenever events indicate that the carrying amount of the asset group may not be recoverable. If circumstances require a long-lived asset be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by the asset group to the carrying value of the asset group. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

Derivative Instruments

Derivative Instruments

The Company evaluates its contracts to determine whether the contracts are derivative instruments. Certain contracts that literally meet the definition of a derivative may be exempted from derivative accounting as normal purchases or normal sales. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from the accounting and reporting requirements of derivative accounting.

The Company enters into short-term cash, option and futures contracts as a means of securing purchases of corn, natural gas and sales of ethanol for the plant and managing exposure to changes in commodity and energy prices. All of the Company's derivatives are designated as non-hedge derivatives for accounting purposes, with changes in fair value recognized in net income. Although the contracts are economic hedges of specified risks, they are not designated as and accounted for as hedging instruments.

As part of its trading activity, the Company uses futures and option contracts through regulated commodity exchanges to manage its risk related to pricing of inventories. To reduce that risk, the Company generally takes positions using cash and futures contracts and options.

Realized and unrealized gains and losses related to derivative contracts related to corn and natural gas are included as a component of cost of goods sold and derivative contracts related to ethanol are included as a component of revenue in the accompanying financial statements. The fair values of contracts entered through commodity exchanges are presented on the accompanying balance sheet as derivative instruments. All contracts with the same counter party are reported on a net basis.

Committed Shares to be Redeemed

Committed Shares to be Redeemed

On June 13, 2013, the Company entered into an agreement with Steve Retterath, the Company's largest member, to repurchase and retire all of the membership units owned by Mr. Retterath. The Company agreed to close on this repurchase on or before August 1, 2013. The Company agreed to repurchase and retire 25,860 membership units owned by Mr. Retterath in exchange for $30 million, to be paid in two equal installments payable at closing and on July 1, 2014. The transaction failed to close by the scheduled date due to objections by Mr. Retterath. Due to all conditions of the agreement being met prior to, or on, August 1, 2013, the Company believes that it has a binding agreement with Mr. Retterath; as such the commitment to repurchase and retire the membership units is reflected in the financial statements as a current liability, due to former member, as if the transaction had closed on August 1, 2013. See Note 9 for additional information.

Net Income per Unit

Net Income per Unit

Basic and diluted net income per unit is computed by dividing net income by the weighted average number of members' units and members' unit equivalents outstanding during the period. There were no member unit equivalents outstanding during the periods presented; accordingly, the Company's basic and diluted net income per unit are the same.

Prior to, or on, August 1, 2013, the Company believes it has a binding agreement with Steve Retterath to repurchase and retire all 25,860 membership units owned by Mr. Retterath. These membership units have thus been excluded in the determination of net income per capital unit as presented in the Statement of Operations. The Company is currently involved in litigation with Mr. Retterath. There is potential that Mr. Retterath will continue as a unit holder upon conclusion of the litigation and said membership units would not be redeemed under the repurchase agreement. If the units are not redeemed, basic and diluted net income per unit, including the 25,860 units, for the three and six months ended June 30, 2016 would be $96.65 and $123.99, respectively. Net income per unit for the three and six months ended June 30, 2015 would have been $92.27 and $120.93, respectively.

Risks and Uncertainties

Risks and Uncertainties

The Company has certain risks and uncertainties that it will experience during volatile market conditions, which can have a severe impact on operations. The Company's revenues are derived from the sale and distribution of ethanol, distiller grains and corn oil to customers primarily located in the United States. Corn for the production process is supplied to the plant primarily from local agricultural producers and from purchases on the open market. For the six months ended June 30, 2016, ethanol sales averaged approximately 78% of total revenues, while approximately 18% of revenues were generated from the sale of distiller grains. Corn oil sales attributed for approximately 4% of revenues during this time period. For the six months ended June 30, 2016, corn costs averaged approximately 81% of cost of goods sold.

The Company's operating and financial performance is largely driven by the prices at which ethanol is sold and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, weather, government policies and programs, and unleaded gasoline and the petroleum markets. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, weather, and government policies and programs. The Company's risk management program is used to protect against the price volatility of these commodities.

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Subsequent Events (Policies)

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events [Text Block]

SUBSEQUENT EVENT

On July 18, 2016, the board of directors of Homeland Energy Solutions, LLC (the "Company") declared a distribution of $3,875,100 to be paid to 64,585 membership units which equals $60.00 per membership unit as of July 18, 2016. The Company paid this distribution in July 2016.

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Inventory (Tables)

6 Months Ended

Jun. 30, 2016

Inventory [Abstract]

Schedule of Inventory

Inventory consisted of the following as of June 30, 2016 and December 31, 2015.

	June 30, 2016		December 31, 2015
Raw Materials	$	5,644,883	$	5,030,182
Work in Process	1,399,405		1,428,646
Finished Goods	2,106,400		1,194,321
Totals	$	9,150,688	$	7,653,149

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Commitments, Contingencies and Agreements (Tables)

6 Months Ended

Jun. 30, 2016

Commitments, Contingencies and Agreements [Abstract]

Schedule of Related Party Transactions

	Three Months Ended		Six Months Ended		Three Months Ended		Six Months Ended
	June 30, 2016		June 30, 2016		June 30, 2015		June 30, 2015
Sales ethanol	$	55,245,000	$	102,235,000	$	53,236,000	$	97,532,000
Sales distiller grains	12,040,000		24,033,000		17,176,000		32,515,000
Sales corn oil	2,860,000		5,188,000		2,338,000		4,373,000
Marketing fees ethanol	$	42,000	$	84,000	$	42,000	$	84,000
Marketing fees distiller grains	189,000		395,000		205,000		366,000
Marketing fees corn oil	25,000		50,000		25,000		46,000
					As of June 30, 2016		As of December 31, 2015
Amount due from RPMG					$	1,770,000	$	3,641,000
Amount due from CHS					1,661,000		1,179,000

Contractual Obligation, Fiscal Year Maturity Schedule

2017	$	3,787,000
2018	3,787,000
2019	2,841,000
Total anticipated commitments	$	10,415,000

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Lease Obligations (Tables)

6 Months Ended

Jun. 30, 2016

Lease Obligations [Abstract]

Operating Leases Minimum Rental Commitments

2017	$	1,435,000
2018	413,000
Total lease commitments	$	1,848,000

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments [Abstract]

Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block]

	Income Statement Classification	Realized Gain (Loss)			Change In Unrealized Gain (Loss)			Total Gain (Loss)
Derivatives not designated as hedging instruments:
Commodity contracts for the
three months ended June 30, 2016	Cost of Goods Sold	$	(545,000	)	$	1,850,000		$	1,305,000
Commodity contracts for the
three months ended June 30, 2015	Cost of Goods Sold	$	1,048,000		$	(3,090,000	)	$	(2,042,000	)
Commodity contracts for the
six months ended June 30, 2016	Cost of Goods Sold	$	(29,000	)	$	2,356,000		$	2,327,000
Commodity contracts for the
six months ended June 30, 2015	Cost of Goods Sold	$	1,536,000		$	(2,624,000	)	$	(1,088,000	)

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location [Table Text Block]

	Balance Sheet Classification	June 30, 2016			December 31, 2015
Futures contracts through March 2017
In gain position		$	2,818,000		$	462,000
Cash (owed to) held by broker		(557,000		)	244,000
	Current Asset	$	2,261,000		$	706,000

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Measurements [Abstract]

Fair Value, Measurement Inputs, Disclosure [Text Block]

	Total		Level 1		Level 2		Level 3
As of June 30, 2016
Trading securities	$	41,650,000	$	41,650,000	$	—	$	—
Derivative financial instruments	$	2,818,000	$	2,818,000	$	—	$	—
As of December 31, 2015
Trading securities	$	40,731,000	$	40,731,000	$	—	$	—
Derivative financial instruments	$	462,000	$	462,000	$	—	$	—

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Product (Details) - Ethanol [Member] gal in Millions	6 Months Ended
	Jun. 30, 2016 gal
Product Information [Line Items]
Annual Production Capacity, Minimum	100
Annual Production Capacity, Current	145

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Nature of Business and Significant Accounting Policies Trading Securities (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading Securities, Cost	$ 41,476,000		$ 41,476,000		$ 41,157,000
Due to former member	30,000,000		$ 30,000,000		30,000,000
Partners' Capital Account, Units, Redeemed			25,860
Director [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Due to former member	30,000,000		$ 30,000,000
Partners' Capital Account, Units, Redeemed			25,860
Other Nonoperating Income (Expense) [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Net Realized and Unrealized Gain (Loss) on Trading Securities	376,000	$ 7,000	$ 919,000	$ 260,000
Fair Value, Measurements, Recurring [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading Securities	$ 41,650,000		$ 41,650,000		$ 40,731,000

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Net Income per Unit (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Nature of Business and Significant Accounting Policies [Abstract]
Number of units redeemed			25,860
Payments for Repurchase of Common Stock	$ 30,000,000		$ 30,000,000		$ 30,000,000
Earnings Per Share, Basic and Diluted, Including Redeemed Shares	$ 96.65	$ 92.27	$ 123.99	$ 120.93

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Risks and Uncertainties (Details)	6 Months Ended
	Jun. 30, 2016
Sales Revenue, Segment [Member] | Ethanol [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	78.00%
Sales Revenue, Segment [Member] | Distillers Grains [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	18.00%
Sales Revenue, Segment [Member] | Corn Oil [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	4.00%
Cost of Goods, Segment [Member] | Corn [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	81.00%

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Inventory (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Inventory [Abstract]
Raw Materials	$ 5,644,883	$ 5,030,182
Work in Process	1,399,405	1,428,646
Finished Goods	2,106,400	1,194,321
Inventory	$ 9,150,688	$ 7,653,149

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Debt Nature of Business (Details) gal in Millions	6 Months Ended
	Jun. 30, 2016 gal
Ethanol [Member]
Product Information [Line Items]
Annual Production Capacity, Minimum	100

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Debt (Details) - Line of Credit [Member] - Home Federal Savings Bank [Member] - Term Revolving Loan [Member] - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.10%
Line of Credit Facility, Maximum Borrowing Capacity	$ 20,000,000
Line of Credit Facility, Interest Rate at Period End	3.5357%
Line of Credit Facility, Fair Value of Amount Outstanding	$ 0	$ 0
Line of Credit Facility, Remaining Borrowing Capacity	$ 20,000,000

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Related Party Transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Related Party Transaction [Line Items]
Number of units redeemed			25,860
Due to former member	$ 30,000,000		$ 30,000,000		$ 30,000,000
Purchases from Related Party	2,584,000	$ 991,000	4,381,000	$ 3,194,000
Due to Related Parties	0		$ 0
Director [Member]
Related Party Transaction [Line Items]
Number of units redeemed			25,860
Due to former member	$ 30,000,000		$ 30,000,000

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Supply Commitments (Details) - Supply Commitment [Member] lb in Millions, gal in Millions	6 Months Ended
	Jun. 30, 2016 gal lb tons
Ethanol [Member]
Supply Commitment [Line Items]
Supply Commitment, Minimum Amount at Varying Fixed Price, Mass	6
Supply Commitment, Minimum Amount at Basis Price Levels, Mass	30
Corn Oil [Member]
Supply Commitment [Line Items]
Supply Commitment, Remaining Minimum Amount Committed, Weight | lb	2
Distillers Grains [Member]
Supply Commitment [Line Items]
Supply Commitment, Remaining Minimum Amount Committed, Weight | tons	35,000

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Related Party (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Investor [Member]
Related Party Transaction [Line Items]
Equity Method Investments	$ 2,468,000		$ 2,468,000
RPMG [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Due from (to) Related Party	1,770,000		1,770,000		$ 3,641,000
CHS [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Due from (to) Related Party	1,661,000		1,661,000		$ 1,179,000
Ethanol [Member] | Investor [Member]
Related Party Transaction [Line Items]
Sales	55,245,000	$ 53,236,000	102,235,000	$ 97,532,000
Marketing Fees	42,000	42,000	84,000	84,000
Distillers Grains [Member]
Related Party Transaction [Line Items]
Sales Revenue, Goods, Net	12,040,000	17,176,000	24,033,000	32,515,000
Other Selling and Marketing Expense	189,000	205,000	395,000	366,000
Corn Oil [Member] | Investor [Member]
Related Party Transaction [Line Items]
Sales	2,860,000	2,338,000	5,188,000	4,373,000
Marketing Fees	$ 25,000	$ 25,000	$ 50,000	$ 46,000

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Purchase Commitments (Details) - Corn [Member] bu in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) bu
Long-term Purchase Commitment [Line Items]
Long-term Purchase Commitment, Amount | $	$ 24,797,000
Long-term Purchase Commitment, Minimum Mass Required | bu	1,820

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Purchase Commitments Schedule (Details) - Public Utilities, Inventory, Fuel [Member]	Jun. 30, 2016 USD ($)
Long-term Purchase Commitment [Line Items]
Purchase Obligation, Due in 2017	$ 3,787,000
Purchase Obligation, Due in 2018	3,787,000
Purchase Obligation, Due in 2019	2,841,000
Purchase Obligation	$ 10,415,000

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Lease Obligations (Details) - Railroad Transportation Equipment [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Operating Leased Assets [Line Items]
Operating Leases, Rent Expense	$ 415,000	$ 402,000	$ 830,000	$ 818,000
Operating Lease Payments Due 2016	1,435,000		1,435,000
Operating Lease Payments Due 2017	413,000		413,000
Total Operating Lease Payments Due	$ 1,848,000		$ 1,848,000

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Derivative Instruments Derivative Instruments (Details) bu in Millions	6 Months Ended
	Jun. 30, 2016 bu
Corn [Member]
Derivative [Line Items]
Concentration Risk, Amount of Material	49
Designated as Hedging Instrument [Member] | Corn [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount, Percent of Required Need, Coverage	11.00%
Designated as Hedging Instrument [Member] | Corn [Member] | Maximum [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount, Percent of Required Need, Yearly Average	60.00%
Designated as Hedging Instrument [Member] | Corn [Member] | Minimum [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount, Percent of Required Need, Yearly Average	5.00%

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Derivative Instruments - Income Statement (Details) - Commodity Contract [Member] - Not Designated as Hedging Instrument [Member] - Cost of Sales [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments, Realized Gain (Loss) Recognized in Income	$ (545,000)	$ 1,048,000	$ (29,000)	$ 1,536,000
Derivative Instruments, Unrealized Gain (Loss) Recognized in Income	1,850,000	(3,090,000)	2,356,000	(2,624,000)
Derivative Instruments, Gain (Loss) Recognized in Income	$ 1,305,000	$ (2,042,000)	$ 2,327,000	$ (1,088,000)

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Derivative Instruments - Balance Sheet (Details) - Other Current Assets [Member] - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Derivatives, Fair Value [Line Items]
Other Receivables from Broker-Dealers and Clearing Organizations	$ (557,000)	$ (244,000)
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value	2,261,000	706,000
Commodity Contract [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	$ 2,818,000	$ 462,000

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Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading Securities	$ 41,650,000	$ 40,731,000
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading Securities	41,650,000	40,731,000
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading Securities	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading Securities	0	0
Commodity Contract [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	2,818,000	462,000
Commodity Contract [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	2,818,000	462,000
Commodity Contract [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	0	0
Commodity Contract [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Asset	$ 0	$ 0

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Subsequent Events (Details) - USD ($)	3 Months Ended	6 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Jun. 30, 2015
Subsequent Event [Line Items]
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Paid		$ 0	$ 9,816,920
Subsequent Event [Member]
Subsequent Event [Line Items]
Partners' Capital Account, Units	64,585
Distribution Made to Limited Liability Company (LLC) Member, Distributions Paid, Per Unit	$ 60.00
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Paid	$ 3,875,100