10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to

 COMMISSION FILE NO. 000-50253

South Dakota Soybean Processors, LLC

(Exact name of registrant as specified in its charter)

South Dakota	46-0462968
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
100 Caspian Avenue; PO Box 500 Volga, South Dakota	57071
(Address of Principal Executive Offices	(Zip Code)

(605) 627-9240

(Registrant's telephone number, including area code)

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.

Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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        ¨    No

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

¨     Large Accelerated Filer	¨     Accelerated Filer	x     Non-Accelerated Filer	¨    Smaller Reporting Company
		(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). 

¨    Yes       x    No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.     Yes   ¨  No   ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: On November 7, 2019, the registrant had 30,419,000 capital units outstanding.

Table of Contents  

			Page
Part I.	FINANCIAL INFORMATION		3
	Item I.	Financial Statements (Unaudited)	3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
	Item 4.	Controls and Procedures	24
Part II.	OTHER INFORMATION		25
	Item 1.	Legal Proceedings	25
	Item 1A.	Risk Factors	25
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
	Item 3.	Defaults among Senior Securities	25
	Item 4.	Mine Safety Disclosures	25
	Item 5.	Other Information	25
	Item 6.	Exhibits	25
Signatures			26

2

PART I – FINANCIAL INFORMATION

Item 1.    Financial Statements

South Dakota Soybean Processors, LLC

Condensed Financial Statements

September 30, 2019 and 2018

3

South Dakota Soybean Processors, LLC

Condensed Balance Sheets

	September 30, 2019			December 31, 2018
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	239,121		$	7,197,082
Trade accounts receivable	17,959,870			20,550,438
Inventories	52,577,554			36,716,014
Margin deposits	2,764,721			2,350,852
Prepaid expenses	719,047			1,492,163
Total current assets	74,260,313			68,306,549
Property and equipment	115,116,127			110,314,779
Less accumulated depreciation	(54,325,980		)	(51,246,765		)
Total property and equipment, net	60,790,147			59,068,014
Other assets
Investments in related parties	7,873,727			8,009,315
Investments in cooperatives	1,562,098			1,552,022
Right-of-use lease asset, net	6,735,845			7,918,283
Total other assets	16,171,670			17,479,620
Total assets	$	151,222,130		$	144,854,183

(continued on following page)

4

South Dakota Soybean Processors, LLC

Condensed Balance Sheets (continued)

	September 30, 2019		December 31, 2018
	(Unaudited)
Liabilities and Members' Equity
Current liabilities
Excess of outstanding checks over bank balance	$	5,192,413	$	3,893,179
Current maturities of long-term debt	4,603,342		61,964
Note payable - seasonal loan	3,738,236		—
Current operating lease liabilities	2,818,321		2,714,928
Accounts payable	2,148,992		2,325,404
Accrued commodity purchases	26,093,911		35,384,390
Accrued expenses	3,182,372		3,697,631
Accrued interest	62,675		10,673
Deferred liabilities - current	319,007		792,384
Total current liabilities	48,159,269		48,880,553
Long-term liabilities
Long-term debt, net of current maturities and unamortized debt     issuance costs	11,991,385		593,027
Long-term operating lease liabilities	3,917,524		5,203,355
Total long-term liabilities	15,908,909		5,796,382
Commitments and contingencies (Notes 6, 7, 8, and 13)
Members' equity
Class A Units, no par value, 30,419,000 units issued and     outstanding at September 30, 2019 and December 31, 2018	87,153,952		90,177,248
Total liabilities and members' equity	$	151,222,130	$	144,854,183

The accompanying notes are an integral part of these condensed financial statements.

5

South Dakota Soybean Processors, LLC

Condensed Statements of Operations (Unaudited)

For the Three and Nine-Month Periods Ended September 30, 2019 and 2018

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net revenues	$	85,001,379		$	100,386,226		$	277,299,775		$	292,173,855
Cost of revenues:
Cost of product sold	65,035,124			70,997,345			212,714,179			227,452,292
Production	8,889,751			6,691,112			22,583,763			19,664,019
Freight and rail	8,212,636			9,879,915			26,472,517			26,954,523
Brokerage fees	146,960			155,753			476,047			466,707
Total cost of revenues	82,284,471			87,724,125			262,246,506			274,537,541
Gross profit (loss)	2,716,908			12,662,101			15,053,269			17,636,314
Operating expenses:
Administration	848,890			1,009,383			2,781,405			2,791,039
Operating income (loss)	1,868,018			11,652,718			12,271,864			14,845,275
Other income (expense):
Interest expense	(196,440		)	(257,772		)	(656,729		)	(841,503		)
Other non-operating income (expense)	(17,253		)	162,989			402,213			557,865
Patronage dividend income	—			49,735			169,456			146,258
Total other income (expense)	(213,693		)	(45,048		)	(85,060		)	(137,380		)
Income (loss) before income taxes	1,654,325			11,607,670			12,186,804			14,707,895
Income tax benefit (expense)	—			—			(600		)	(1,960		)
Net income (loss)	$	1,654,325		$	11,607,670		$	12,186,204		$	14,705,935
Basic and diluted earnings (loss) per capital unit	$	0.05		$	0.38		$	0.40		$	0.48
Weighted average number of capital units outstanding for calculation of basic and diluted earnings (loss) per capital unit	30,419,000			30,419,000			30,419,000			30,419,000

The accompanying notes are an integral part of these condensed financial statements.

6

South Dakota Soybean Processors, LLC

Condensed Statements of Changes in Members' Equity (Unaudited)

For the Nine Months EndedSeptember 30, 2019 and 2018

	Class A Units
	Units	Amount
Balances, December 31, 2017	30,419,000	$	69,375,206
Net income	—	14,705,935
Distribution to members	—	(5,075,303		)
Balances, September 30, 2018	30,419,000	$	79,005,838
Balances, December 31, 2018	30,419,000	$	90,177,248
Net income	—	12,186,204
Distribution to members	—	(15,209,500		)
Balances, September 30, 2019	30,419,000	$	87,153,952

The accompanying notes are an integral part of these condensed financial statements.

7

South Dakota Soybean Processors, LLC

Condensed Statements of Cash Flows (Unaudited)

For the Nine Months Ended September 30,2019 and 2018

	2019			2018
Operating activities
Net income (loss)	$	12,186,204		$	14,705,935
Charges and credits to net income not affecting cash:
Depreciation and amortization	3,199,108			3,097,587
Net (gain) loss recognized on derivative activities	(2,983,943		)	(3,059,988		)
Gain on sales of property and equipment	(6,687		)	(271,933		)
Loss on equity method investment	135,588			61,996
Non-cash patronage dividends	(42,364		)	(24,131		)
Change in current assets and liabilities	(20,331,307		)	202,992
Net cash provided by (used for) operating activities	(7,843,401		)	14,712,458
Investing activities
Purchase of investments	—			(5,000,000		)
Retirement of patronage dividends	32,288			—
Proceeds from sales of property and equipment	64,800			309,870
Purchase of property and equipment	(4,977,738		)	(5,874,304		)
Net cash provided by (used for) investing activities	(4,880,650		)	(10,564,434		)
Financing activities
Change in excess of outstanding checks over bank balances	1,299,234			(285,932		)
Net proceeds (payments) from seasonal borrowings	3,738,236			—
Distributions to members	(15,209,500		)	(5,075,303		)
Payments for debt issue costs	—			(10,500		)
Proceeds from long-term debt	71,476,467			47,306,495
Principal payments on long-term debt	(55,538,347		)	(46,074,101		)
Net cash provided by (used for) financing activities	5,766,090			(4,139,341		)
Net change in cash and cash equivalents	(6,957,961		)	8,683
Cash and cash equivalents, beginning of period	7,197,082			683,523
Cash and cash equivalents, end of period	$	239,121		$	692,206
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	604,727		$	801,815
Income taxes	$	—		$	—

The accompanying notes are an integral part of these condensed financial statements. 

8

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

Note 1 -         Principal Activity and Significant Accounting Policies

The unaudited condensed financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although South Dakota Soybean Processors, LLC (the “Company”, “LLC”, “we”, “our”, or “us”) believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in the accompanying condensed financial statements. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full year due in part to the seasonal nature of some of the Company’s businesses. The balance sheet data as of December 31, 2018 has been derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

These statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2018, included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 20, 2019.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue

The Company accounts for all of its revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers.

The Company principally generates revenue from merchandising and transporting manufactured agricultural products used as ingredients in food, feed, energy and industrial products. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any amounts collected on behalf of third parties (e.g. - taxes). The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product to a customer. Control transfer typically occurs when goods are shipped from our facilities or at other predetermined control transfer points (for instance, destination terms). Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of revenues. Accordingly, amounts billed to customers for such costs are included as a component of revenues.

Payments received in advance to the transfer of goods, or "contract liabilities", are included in "Deferred liabilities - current" on the Company's condensed balance sheets. These customer prepayments totaled $140,396 and $15,042 as of September 30, 2019 and December 31, 2018, respectively. Of the $15,042 balance as of December 31, 2018, contract liabilities recognized as revenues were $0 and $15,042 for the three and nine month periods ended September 30, 2019, respectively.

The following table presents a disaggregation of revenue from contracts with customers for the three and nine month periods ended September 30, 2019 and 2018, by product type:

9

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Soybean meal and hulls	$	57,332,025	$	70,011,833	$	181,532,951	$	195,009,313
Soybean oil and oil byproducts	27,669,354		30,374,393		95,766,824		97,164,542
Totals	$	85,001,379	$	100,386,226	$	277,299,775	$	292,173,855

Recent accounting pronouncements

Effective January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02 (Leases). The standard requires companies to recognize operating lease assets and liabilities on the balance sheet and disclose key information regarding leasing arrangements. The Company has elected the package of practical expedients permitted in ASC Topic 842. Accordingly, the Company accounted for all its leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain leases under Topic 842, (b) whether classification of the operating leases would be different in accordance with ASC Topic 842, or (c) whether the unamortized initial direct costs before transition adjustments, if any, would have met the definition of initial direct costs in ASC Topic 842 at lease commencement. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2018 (the beginning of the earliest period presented): (a) a lease liability of $10.3 million, which represents the present value of the remaining lease payments of $11,000,000, discounted using the Company's incremental borrowing rate at the time of adoption of the respective leases, and (b) a right-to-use asset of $10.3 million, which represents the total lease liability adjusted for any unamortized initial direct costs. The Company also elected not to recognize and measure any short-term lease, which is a lease that, at the commencement date, has a term of 12 months or less and does not contain an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Note 2 -         Accounts Receivable

Accounts receivable are considered past due when payments are not received on a timely basis in accordance with the Company’s credit terms, which is generally 30 days from invoice date. Accounts considered uncollectible are written off. The Company’s estimate of the allowance for doubtful accounts is based on historical experience, its evaluation of the current status of receivables, and unusual circumstances, if any.

The following table presents the aging analysis of trade receivables as of September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Past due:
Less than 30 days past due	$	3,674,172	$	5,362,970
30-60 days past due	312,339		387,670
60-90 days past due	14,279		101,687
Greater than 90 days past due	15,782		84
Total past due	4,016,572		5,852,411
Current	13,943,298		14,698,027
Totals	$	17,959,870	$	20,550,438

10

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

The following table provides information regarding the Company’s allowance for doubtful accounts receivable as of September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Balances, beginning of period	$	—	$	—
Amounts charged (credited) to costs and expenses	—		—
Additions (deductions)	—		—
Balances, end of period	$	—	$	—

In general, cash is applied to the oldest outstanding invoice first, unless payment is for a specified invoice.  The Company, on a case by case basis, may charge a late fee of 1.5% per month on past due receivables.

Note 3 -           Inventories

The Company’s inventories consist of the following at September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Finished goods	$	26,736,079	$	21,283,354
Raw materials	25,531,163		15,206,526
Supplies & miscellaneous	310,312		226,134
Totals	$	52,577,554	$	36,716,014

Finished goods and raw materials are valued at estimated market value, which approximates net realizable value. In addition, futures and option contracts are marked to market through cost of revenues, with unrealized gains and losses recorded in the above inventory amounts. Supplies and other inventories are stated at net realizable value.

Note 4 -         Investments in Related Parties

The Company accounts for its investment in Prairie AquaTech, LLC using the equity method due to the Company's ability to exercise significant influence based on its position on the board of managers. The Company recognized gains (losses) of $(36,099) and $91,781 during the three months ended September 30, 2019 and 2018, respectively, and $(135,588) and $(61,996) during the nine months ended September 30, 2019 and 2018, respectively, which is included in other non-operating income (expense).

The Company accounts for the investments in Prairie AquaTech Investments, LLC and Prairie AquaTech Manufacturing, LLC using the cost method. In the construction phase of the facility, the Company is acting as the Owner’s representative and providing various construction and management services. However, once the facility is operational in fiscal year 2019, the Company will not be able to exercise significant influence or control over any aspect of operations. Under the cost method, the investments are recorded at cost and the Company will record any dividends as income when received.

The results of operations and financial position of the Company's equity method investment in Prairie AquaTech, LLC as of September 30, 2019 and December 31, 2018 and for the three and nine-month periods ended September 30, 2019 and 2018 are summarized below.

11

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
Condensed income statement:
Revenues	$	315,130		$	476,250	$	598,223		$	762,359
Expenses	(733,092		)	136,606		(2,159,700		)	(1,145,481		)
Other income (expense)	10,268			48,067		30,183			(172,071		)
Net income (loss)	$	(407,694	)	$	660,923	$	(1,531,294	)	$	(555,193	)

	September 30, 2019		December 31, 2018
Condensed balance sheet information:
Assets	$	5,472,206	$	7,264,092
Liabilities	362,044		610,789
Equity	5,110,162		6,653,303

Note 5 -         Property and Equipment

The following is a summary of the Company's property and equipment at September 30, 2019 and December 31, 2018:

	2019							2018
	Cost		Accumulated Depreciation			Net		Net
Land	$	516,326	$	—		$	516,326	$	516,326
Land improvements	2,043,236		(581,255		)	1,461,981		1,556,183
Buildings and improvements	21,602,738		(9,346,014		)	12,256,724		12,588,664
Machinery and equipment	79,613,657		(43,219,649		)	36,394,008		38,513,796
Railroad cars	1,238,508		(24,770		)	1,213,738		1,232,315
Company vehicles	146,754		(106,417		)	40,337		16,307
Furniture and fixtures	1,526,779		(1,047,875		)	478,904		543,801
Construction in progress	8,428,129		—			8,428,129		4,100,622
Totals	$	115,116,127	$	(54,325,980	)	$	60,790,147	$	59,068,014

Depreciation of property and equipment was $1,067,076 and $1,087,935 for the three months ended September 30, 2019 and 2018, respectively, and $3,197,493 and $3,085,472 for the nine months ended September 30, 2019 and 2018, respectively.

Note 6 -         Note Payable – Seasonal Loan

The Company has entered into a revolving credit agreement with CoBank which expires December 1, 2019. The purpose of the credit agreement is to finance the operating needs of the Company. Under this agreement, the Company may borrow up to $20 million, and advances on the revolving credit agreement are secured. Interest accrues at a variable rate (4.22% at September 30, 2019). The Company pays a 0.20% annual commitment fee on any funds not borrowed. There were advances outstanding of $3,738,236 and $0 at September 30, 2019 and December 31, 2018, respectively. The remaining available funds to borrow under the terms of the revolving credit agreement were $16.3 million as of September 30, 2019.

12

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

Note 7 -         Long-Term Debt

The following is a summary of the Company's long-term debt at September 30, 2019 and December 31, 2018:

	September 30, 2019			December 31, 2018
Revolving term loan from CoBank, interest at variable rates (4.47% and 4.96% at September 30, 2019 and December 31, 2018, respectively), secured by substantially all property and equipment. Loan matures September 20, 2023.	$	16,000,000		$	—
Note payable to Brookings Regional Railroad Authority, due in annual principal and interest installments of $75,500, interest rate at 2.00%, secured by railroad track assets. Note matures June 1, 2020.	603,342			665,222
Total debt before debt issuance costs	16,603,342			665,222
Less current maturities	(4,603,342		)	(61,964		)
Less debt issuance costs, net of amortization of $5,385 and $3,769 as of September 30, 2019 and December 31, 2018, respectively	(8,615		)	(10,231		)
Total long-term debt	$	11,991,385		$	593,027

The Company entered into an agreement as of March 28, 2017 with CoBank to amend and restate its Credit Agreement, which includes both the revolving term and seasonal loans. Under the terms and conditions of the Credit Agreement, CoBank agreed to make advances to the Company for up to $24,000,000 on the revolving term loan with a variable effective interest rate of 4.47%. The available commitment decreases in scheduled periodic increments of $2,000,000 every six months starting March 20, 2018 until maturity on September 20, 2023. The Company pays a 0.40% annual commitment fee on any funds not borrowed. The debt issuance costs of $14,000 paid by the Company on this amendment will be amortized over the term of loan. The principal balance outstanding on the revolving term loan was $16,000,000 and $0 as of September 30, 2019 and December 31, 2018, respectively. There were no remaining commitments available to borrow on the revolving term loan as of September 30, 2019.

Under this agreement, the Company is subject to compliance with standard financial covenants and the maintenance of certain financial ratios. The Company was in compliance with all covenants and conditions with CoBank as of September 30, 2019.

Effective March 1, 2013, the State of South Dakota Department of Transportation agreed to loan the Brookings County Regional Railway Authority $964,070 for purposes of making improvements to the railway infrastructure near the Company’s soybean processing facility in Volga, South Dakota. In consideration of this secured loan, the Company agreed to provide a guarantee to the State of South Dakota Department of Transportation for the full amount of the loan, plus interest. This guaranty was converted into a direct obligation of the Company’s on October 16, 2013, when the Company received the entire loan proceeds and assumed responsibility for paying the annual principal and interest payments.

The following are minimum principal payments on long-term debt obligations for the twelve-month periods ended September 30:

2020	$	4,603,342
2021	4,000,000
2022	4,000,000
2023	4,000,000
Total	$	16,603,342

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South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

Note 8 -        Operating Leases

The Company has several operating leases for railcars. These leases have terms ranging from 3-18 years and do not have renewal terms provided. The leases require the Company to maintain the condition of the railcars, restrict the use of the railcars to specified products, such as soybean meal, hulls or oil, limit usage to the continental United States, Canada or Mexico, require approval to sublease to other entities, and require the Company's submission of its financial statements. Lease expense for all railcars was $766,022 and $787,306 for the three months ended September 30, 2019 and 2018, respectively, and $2,302,012 and $2,369,318 for the nine months ended September 30, 2019 and 2018, respectively.

The following is a schedule of the Company's operating leases for railcars as of September 30, 2019:

Lessor	Quantity of Railcars	Commencement Date	Maturity Date	Monthly Payment
Wells Fargo Rail	112	8/1/2017	7/31/2022	$	52,557
Wells Fargo Rail	107	1/1/2018	12/31/2022	35,845
Wells Fargo Rail	7	1/1/2004	12/31/2021	2,926
Wells Fargo Rail	15	1/1/2004	12/31/2021	5,850
Wells Fargo Rail	8	1/1/2015	12/31/2021	3,600
Trinity Capital	88	8/1/2002	7/31/2020	33,704
Trinity Capital	29	12/1/2015	11/30/2020	28,536
Trinity Capital	20	10/1/2015	9/30/2020	13,600
Midwest Railcar Corporation	64	1/1/2015	12/31/2021	27,200
American Railcar Leasing	30	7/1/2015	6/30/2021	30,780
Andersons Railcar Leasing Co.	10	7/1/2018	6/30/2023	5,000
Andersons Railcar Leasing Co.	20	7/1/2019	6/30/2026	11,300
GATX Corporation	15	7/1/2017	6/30/2020	4,500
	525			$	255,398

The Company also has a number of other operating leases for machinery and equipment. These leases have terms ranging from 3-7 years; however, most of these leases have automatic renewal terms. These leases require monthly payments of $3,912. Rental expense under these other operating leases was $21,081 and $9,540 for the three months ended September 30, 2019 and 2018, respectively, and $41,723 and $34,118 for the nine-month periods ended September 30, 2019 and 2018, respectively.

Operating leases are included in right-to-use lease assets, current operating lease liabilities, and long-term lease liabilities on the condensed balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company's secured incremental borrowing rates or implicit rates, when readily determinable. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

Lease expense for these operating leases is recognized on a straight-line basis over the lease terms. The components of lease costs recognized within our condensed statements of operations for the nine-month periods ended September 30, 2019 and 2018 were as follows:

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South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenues - Freight and rail	$	766,022	$	787,306	$	2,302,012	$	2,369,318
Cost of revenues - Production	17,973		6,306		32,606		25,665
Administration expenses	3,108		3,234		9,117		8,453
Total operating lease costs	$	787,103	$	796,846	$	2,343,735	$	2,403,436

The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of September 30, 2019:

	Railcars			Other			Total
Twelve-month periods ended September 30:
2020	$	2,931,312		$	41,377		$	2,972,689
2021	2,065,429			38,263			2,103,692
2022	1,322,596			37,640			1,360,236
2023	288,135			36,696			324,831
2024	135,600			20,818			156,418
Thereafter	237,300			4,943			242,243
Total lease payments	6,980,372			179,737			7,160,109
Less amount of lease payments representing interest	(404,268		)	(19,996		)	(424,264		)
Total present value of lease payments	$	6,576,104		$	159,741		$	6,735,845

Note 9 -        Member Distribution

On February 5, 2019, the Company’s Board of Managers approved a cash distribution of approximately $15.2 million, or 50.0¢ per capital unit. The distribution was paid in accordance with the Company’s operating agreement and distribution policy on February 7, 2019.

Note 10 -         Derivative Instruments and Hedging Activities

In the ordinary course of business, the Company enters into contractual arrangements as a means of managing exposure to changes in commodity prices and, occasionally, foreign exchange and interest rates. The Company’s derivative instruments primarily consist of commodity futures, options and forward contracts, and interest rate swaps, caps and floors. Although these contracts may be effective economic hedges of specified risks, they are not designated as, nor accounted for, as hedging instruments. These contracts are recorded on the Company’s condensed balance sheets at fair value as discussed in Note 11, Fair Value.

As of September 30, 2019 and December 31, 2018, the value of the Company’s open futures, options and forward contracts was approximately $484,832 and $802,770, respectively.

		As of September 30, 2019
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets	$	3,633,222	$	2,707,719
Foreign exchange contracts	Current Assets	16,457		8,509
Interest rate caps and floors	Current Liabilities	—		448,619
Totals		$	3,649,679	$	3,164,847

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South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

		As of December 31, 2018
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets	$	3,696,540	$	2,722,830
Foreign exchange contracts	Current Assets	129,258		100,730
Interest rate caps and floors	Current Liabilities	—		199,468
Totals		$	3,825,798	$	3,023,028

During the three and nine-month periods ended September 30, 2019 and 2018, net realized and unrealized gains (losses) on derivative transactions were recognized in the condensed statements of operations as follows:

	Net Gain (Loss) Recognized  on Derivative Activities for the					Net Gain (Loss) Recognized  on Derivative Activities for the
	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
Derivatives not designated as hedging instruments:
Commodity contracts	$	2,188,931		$	4,607,791	$	3,197,752		$	2,801,898
Foreign exchange contracts	(10,091		)	46,342		34,738			6,158
Interest rate swaps, caps and floors	(92,998		)	40,008		(248,547		)	251,932
Totals	$	2,085,842		$	4,694,141	$	2,983,943		$	3,059,988

Note 11 -       Fair Value

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, this guidance establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. The three levels of hierarchy and examples are as follows:

• Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the Chicago Board of Trade (“CBOT”).

• Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs, such as commodity prices using forward future prices.

• Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

The following tables set forth financial assets and liabilities measured at fair value in the condensed balance sheets and the respective levels to which fair value measurements are classified within the fair value hierarchy as of September 30, 2019 and December 31, 2018:

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South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

	Fair Value as of September 30, 2019
	Level 1		Level 2		Level 3		Total
Financial assets:
Inventory	$	925,503	$	51,258,118	$	—	$	52,183,621
Margin deposits (deficits)	$	2,764,721	$	—	$	—	$	2,764,721

	Fair Value as of December 31, 2018
	Level 1		Level 2		Level 3		Total
Financial assets:
Inventory	$	973,710	$	35,338,531	$	—	$	36,312,241
Margin deposits	$	2,350,852	$	—	$	—	$	2,350,852

In accordance with ASC 825, Financial Instruments, the Company enters into various commodity derivative instruments, including futures, options, swaps and other agreements. The fair value of the Company’s commodity derivatives is determined using unadjusted quoted prices for identical instruments on the CBOT. The Company estimates the fair market value of their finished goods and raw materials inventories using the market price quotations of similar forward future contracts listed on the CBOT and adjusts for the local market adjustments derived from other grain terminals in our area.

The Company considers the carrying amount of significant classes of financial instruments on the balance sheets, including cash, accounts receivable, and accounts payable, to be reasonable estimates of fair value due to their length or maturity. The fair value of the Company’s long-term debt approximates the carrying value. The interest rates on the long-term debt are similar to rates the Company would be able to obtain currently in the market.

The Company has patronage investments in other cooperatives and common and preferred stock holdings in privately held entities. There is no market for their patronage credits or the entity’s common and preferred holdings, and it is impracticable to estimate fair value of the Company’s investments. These investments are carried on the balance sheet at original cost plus the amount of patronage earnings allocated to the Company, less any cash distributions received.

Note 12 -       Related Party Transactions

The Company sold soybean products to Prairie AquaTech, LLC and Prairie AquaTech Manufacturing, LLC totaling $648,215 and $152,838 during the three months ended September 30, 2019 and 2018, respectively, and $942,195 and $233,233 during the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, Prairie AquaTech, LLC and Prairie AquaTech Manufacturing, LLC owed the Company $90,414 and $18,540, respectively.

The Company has entered into agreements with Prairie AquaTech Manufacturing, LLC to perform various management services and to serve as the owner's representative during the construction of its new manufacturing facility adjacent to the Company's plant in Volga, South Dakota. The Company received a total of $1.72 million in compensation for those services, which was recorded in deferred liabilities on the Company's balance sheet. As of September 30, 2019 and December 31, 2018, the balance remaining in deferred liabilities was $178,611 and $777,342, respectively. The Company recognized revenues from management services of $100,834 and $27,693 during the three-month periods ended September 30, 2019 and 2018, respectively, and $666,431 and $55,385 during the nine months endedSeptember 30, 2019 and 2018, respectively.

Note 13 -       Commitments and Contingencies

As of September 30, 2019, the Company had unpaid commitments of approximately $87,000 for construction and acquisition of property and equipment, all of which is expected to be incurred by December 2019.

From time to time in the ordinary course of our business, the Company may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual dispute. The Company carries insurance that provides protection against general commercial liability claims, claims against

17

South Dakota Soybean Processors, LLC

Notes to Condensed Financial Statements

our directors, officer and employees, business interruption, automobile liability, and workers' compensation. The Company is not currently involved in any material legal proceedings and are not aware of any potential claims.

Note 14 -       Subsequent Event

The Company evaluated all of its activities and concluded that no subsequent events have occurred that would require recognition in its financial statements or disclosed in the notes to its financial statements.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

The information in this quarterly report on Form 10-Q for the nine-month period ended September 30, 2019, (including reports filed with the Securities and Exchange Commission (the “SEC” or “Commission”), contains “forward-looking statements” that deal with future results, expectations, plans and performance, and should be read in conjunction with the financial statements and Annual Report on Form 10-K for the year ended December 31, 2018. Forward-looking statements may include statements which use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “predict,” “hope,” “will,” “should,” “could,” “may,” “future,” “potential,” or the negatives of these words, and all similar expressions. Forward-looking statements involve numerous assumptions, risks and uncertainties. Actual results or actual business or other conditions may differ materially from those contemplated by any forward-looking statements. Factors that could cause actual results to differ materially from the forward-looking statements are identified in our Form 10-K for the year ended December 31, 2018.

We are not under any duty to update the forward-looking statements contained in this report, nor do we guarantee future results or performance or what future business conditions will be like. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report.

Executive Overview and Summary

During the nine months ended September 30, 2019, we reported a net income of $12.2 million, compared to $14.7 million during the same period in 2018. The decrease in profitability is largely driven by adverse weather conditions in our soybean procurement area, increased soybean processing in the U.S., and higher maintenance costs.

Poor weather conditions, including heavy snow and rainfall, during the spring of 2019 adversely affected our profitability. Severe flooding in our area contributed to a very late planting season and left a significant number of unplanted fields, causing uncertainty about the quantity and quality of this fall's soybean crop. As a result, farmers became reluctant sellers, leading to increases in soybean prices and deteriorating soybean crush margins.

China's implementation of a 25% tariff on U.S. soybeans in May 2018 effectively halted soybean exports to China, in turn shifting soybean demand to other countries such as Brazil and Argentina. Since China does not typically buy or import soybean meal or oil, soybean meal and oil prices did not decrease at the same rate as soybeans which helped generate unprecedented board crush levels. By 2019, however, U.S. soybean processing facilities, in efforts to capitalize on the high crushing margins, increased their production capacity, decreasing margins back to historically average amounts.

Lastly, our Volga facility completed its regularly scheduled annual shutdown for maintenance. Unfortunately, this year's shutdown was approximately twice as long in duration than in previous years due to extensive repairs and replacements of process equipment. As a result, maintenance expenses, which are part of production costs, increased by approximately $2.1 million during the nine months ended September 30, 2019, compared to the same period in 2018.

We believe the fourth quarter of 2019 will be subject to continued uncertainty. We are unsure about the quantity and quality of the soybeans to be procured at harvest given the effect of poor weather conditions. The prolonged trade disputes with China and other countries are also likely to continue to have a destabilizing effect, adversely impacting soybean prices and crush margins.

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RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2019 and 2018

	Three Months Ended September 30, 2019					Three Months Ended September 30, 2018
	$			% of Revenue		$			% of Revenue
Revenue	$	85,001,379		100.0		$	100,386,226		100.0
Cost of revenues	(82,284,471		)	(96.8	)	(87,724,125		)	(87.4	)
Operating expenses	(848,890		)	(1.0	)	(1,009,383		)	(1.0	)
Other income (expense)	(213,693		)	(0.3	)	(45,048		)	—
Net income	$	1,654,325		1.9		$	11,607,670		11.6

Revenue – Revenue decreased $15.4 million, or 15.3%, for the three months ended September 30, 2019, compared to the same period in 2018. The decrease in revenues is due to a reduction in the quantity of soybeans processed, which decreased the volume of our soybean products available for sale to customers. Our processing volume decreased due to an extended shutdown at our Volga facility in August 2019 for annual maintenance.

Gross Profit/Loss – Gross profit decreased $9.9 million, or 78.5%, for the three-month period ended September 30, 2019, compared to the same period in 2018. The decrease in gross profit is primarily driven by the effect of the current trade dispute between the U.S. and China on the soybean export market and an increase in production expenses. The threat and imposition of tariffs by China on U.S. soybeans in 2018 resulted in a decrease in U.S. soybean prices which improved processing margins for our products in 2018 and early 2019. By 2019, however, U.S. soybean processing facilities, in efforts to capitalize on the high crushing margins, increased their production capacity, decreasing margins back to historically average amounts. In addition, gross profit decreased due to an increase in production expenses of $2.2 million, or 32.9%, for the three-month period ended September 30, 2019, compared to the same period in 2018. Production expenses increased between periods because of an extended shutdown of our Volga facility in August 2019, where we were required to make extensive repairs and replace certain processing equipment.

Operating Expenses – Administrative expenses, including all selling, general and administrative expenses, decreased $160,000, or 15.9%, for the three months ended September 30, 2019, compared to the same period in 2018. The decrease is primarily due to a decrease in personnel costs.

Interest Expense – Interest expense decreased $61,000, or 23.8%, during the three-month period ended September 30, 2019, compared to the same period in 2018. The decrease in interest expense is due primarily to a decrease in borrowings from our lines of credit, as we had less need to borrow due to an increase in working capital and a decrease in commodity prices. The average debt level during the three months ended September 30, 2019 was approximately $16.2 million, compared to $20.5 million for the same period in 2018.

Other Non-Operating Income – Other non-operating income, including patronage dividend income, decreased $230,000 during the three months ended September 30, 2019, compared to the same period in 2018. The decrease in other non-operating income is primarily due to decreases in our equity method investment in Prairie AquaTech, LLC and in patronage dividend income. During the three-month period ended September 30, 2019, losses on our equity method investment totaled $36,099, compared to a gain of $92,000 during the same period in 2018. In addition, CoBank issued to us a dividend in the amount of $50,000 during the quarter ended September 30, 2018, compared to $0 during the same period in 2019.

Net Income/Loss – During the three months ended September 30, 2019, we generated a net income of $1.7 million, compared to $11.6 million for the same period in 2018. The $9.9 million decrease is primarily attributable to a decrease in processing margins and an increase in production costs.

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Comparison of the nine months ended September 30, 2019 and 2018

	Nine Months Ended September 30, 2019					Nine Months Ended September 30, 2018
	$			% of Revenue		$			% of Revenue
Revenue	$	277,299,775		100.0		$	292,173,855		100.0
Cost of revenues	(262,246,506		)	(94.6	)	(274,537,541		)	(94.0	)
Operating expenses	(2,781,405		)	(1.0	)	(2,791,039		)	(1.0	)
Other income (expense)	(85,060		)	—		(137,380		)	—
Income tax benefit (expense)	(600		)	—		(1,960		)	—
Net income	$	12,186,204		4.4		$	14,705,935		5.0

Revenue – Revenue decreased $14.9 million, or 5.1%, for the nine-month period ended September 30, 2019, compared to the same period in 2018. The decrease in revenues is primarily due to a 6.5% decrease in the average sales price of soybean meal. Soybean meal prices were affected by increased production of U.S. soybeans during the nine months ended September 30, 2019, compared to the same period in 2018. With good margins, a record sized soybean crop in the fall of 2018, and the trade dispute with China, the primary importer of U.S. soybeans, soybean processors in the U.S. operated at full capacity, and in some cases increased capacity, in efforts to maximize margins.

Gross Profit/Loss – Gross profit decreased $2.6 million for the nine months ended September 30, 2019, compared to the same period in 2018. The decrease in gross profit is primarily due to a $2.9 million increase in production costs following the extended shutdown at our Volga facility in August 2019.

Operating Expenses – Administrative expenses, including all selling, general and administrative expenses, remained relatively constant for the nine-month period ended September 30, 2019, compared to the same period in 2018.

Interest Expense – Interest expense decreased $185,000, or 22.0%, during the nine months ended September 30, 2019, compared to the same period in 2018. The decrease in interest expense is due primarily to a decrease in borrowings from our lines of credit, as we had less need to borrow due to an increase in working capital and a decrease in commodity prices. The average debt level during the nine-month period ended September 30, 2019 was approximately $17.4 million, compared to $24.0 million for the same period in 2018.

Other Non-Operating Income – Other non-operating income, including patronage dividend income, decreased $132,000 during the nine-month period ended September 30, 2019, compared to the same period in 2018. The decrease in other non-operating income is due to a $265,000 decrease in gains on sales of property and equipment. During the nine-month period ended September 30, 2019, gains on sales of property and equipment totaled $7,000, compared to $272,000 during the same period in 2018.

Net Income/Loss – During the nine-month period ended September 30, 2019, we generated a net income of $12.2 million, compared to $14.7 million for the same period in 2018. The $2.5 million decrease is primarily attributable to an increase in production costs.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash provided by operations and borrowings under our two lines of credit which are discussed below under “Indebtedness.” On September 30, 2019, we had working capital, defined as current assets less current liabilities, of approximately $26.1 million, compared to $18.8 million on September 30, 2018. Working capital increased $7.3 million between periods primarily due to an increase in net income since September 30, 2018. Based on our current plans, we believe that we will continue funding our operating and capital needs from operations and revolving lines of credit.

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Comparison of the Nine Months EndedSeptember 30, 2019 and 2018

	2019			2018
Net cash provided by (used for) operating activities	$	(7,843,401	)	$	14,712,458
Net cash used for investing activities	(4,880,650		)	(10,564,434		)
Net cash provided by (used for) financing activities	5,766,090			(4,139,341		)

Cash Flows Used For Operations

The $22.6 million change in cash flows provided by (used for) operating activities is attributed to a delayed soybean harvest in 2019, compared to the same period in 2018. Typically, we expect that a substantial amount of soybeans harvested in the fall will be delivered to our facilities by early October. However, a long winter and extremely wet spring in 2019 delayed planting and, ultimately, the fall harvest. Consequently, we were required to purchase a significant quantity of soybeans from 2018 to enable us to continue processing until the unexpected peak of harvest in late October. These purchases led to a $15.9 million increase in inventory during the nine-month period ended September 30, 2019, compared to $8.2 million reduction during the same period in 2018.

Cash Flows Used For Investing Activities

The $5.7 million decrease in cash flows used for investing activities during the nine-month period ended September 30, 2019, compared to the same period in 2018, is due to a decrease in investment purchases. During the nine months ended September 30, 2018, we invested an additional $5.0 million in Prairie AquaTech, LLC and its affiliates, compared to $0 during the same period in 2019.

Cash Flows Provided By (Used For) Financing Activities

The $9.9 million change in cash flows provided by (used for) financing activities is principally due to an $18.4 million increase in net proceeds on borrowings. During the nine months endedSeptember 30, 2019, net proceeds on borrowings increased $19.6 million , compared to $1.2 million during the same period in 2018. Partially offsetting the increase in borrowings was a $10.1 million increase in cash distributions to our members. Cash distributions to our members totaled approximately $15.2 million during the nine-month period ended September 30, 2019, compared to $5.1 million during the same period in 2018.

Indebtedness

We have two lines of credit with CoBank, our primary lender, to meet the short and long-term needs of our operations. The first credit line is a revolving long-term loan. Under the terms of this loan, we may borrow funds as needed up to the credit line maximum, or $24.0 million, and then pay down the principal whenever excess cash is available. Repaid amounts may be borrowed up to the available credit line. On March 20, 2018, the available credit line decreased by $2.0 million, and decreases continually by the same amount every six months until the credit line’s maturity on September 20, 2023. We pay a 0.40% annual commitment fee on any funds not borrowed. The principal balance outstanding on the revolving term loan is $16.0 million and $0 as of September 30, 2019 and December 31, 2018. Under this loan, there were no additional funds available to be borrowed as of September 30, 2019.

The second credit line is a revolving working capital (seasonal) loan that matures on December 1, 2019. The primary purpose of this loan is to finance our operating needs. The maximum we may borrow under this credit line is $20 million. We pay a 0.20% annual commitment fee on any funds not borrowed; however, we have the option to reduce the credit line during any given commitment period listed in the credit agreement to avoid the commitment fee. As of September 30, 2019 and December 31, 2018, there were advances outstanding on the seasonal loan of $3.7 million and $0, respectively. There was $16.3 million available to borrow under this loan as of September 30, 2019.

Both loans with CoBank are set up with a variable rate option. The variable rate is set by CoBank and changes weekly on the first business day of each week. We also have a fixed rate option on both loans allowing us to fix rates for any period between one day and the entire commitment period. The annual interest rate on the revolving term loan is 4.47% and 4.96% as of September 30, 2019 and December 31, 2018, respectively. As of September 30, 2019 and December 31, 2018, the interest rate on the seasonal loan is 4.22% and 4.71%, respectively. We were in compliance with all covenants and conditions under the loans as of September 30, 2019 and the date of this filing.

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We also have a loan with the State of South Dakota Department of Transportation in connection with previous improvements made to the railway infrastructure near our soybean processing facility in Volga, South Dakota. Under this loan, which matures on June 1, 2020, we make annual principal and interest payments of $75,500. The principal balance outstanding on this loan was $603,342 and $665,222 as of September 30, 2019 and December 31, 2018, respectively.

OFF BALANCE SHEET FINANCING ARRANGEMENTS

We do not utilize variable interest entities or other off-balance sheet financial arrangements.

Lease Commitments

We have commitments under various operating leases for rail cars, various types of vehicles, and lab and office equipment. Our most significant lease commitments are for rail cars used in the transportation of our products. We have several long-term leases for hopper rail cars and oil tank cars with American Railcar Leasing, Andersons Railcar Leasing Co., GATX Corporation, Midwest Railcar Corporation, Trinity Capital and Wells Fargo Rail. Total lease expense under these arrangements is approximately $766,000 and $787,000 for the three month periods ended September 30, 2019 and 2018, respectively, and $2.3 million and $2.4 million for the nine-month periods ended September 30, 2019 and 2018, respectively.

In addition to rail car leases, we have a few operating leases for various machinery, equipment and storage facilities. Total lease expense under these arrangements is $21,000 and $10,000 for the three month periods ended September 30, 2019 and 2018, respectively, and $41,000 and $34,000 for the nine months ended September 30, 2019 and 2018, respectively. Some of our leases include purchase options, none of which, however, are for a value less than fair market value at the end of the lease.

Contractual Obligations

The following table shows our contractual obligations for the periods presented:

	Payment due by period
CONTRACTUAL OBLIGATIONS	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations (1)	$	18,227,000	$	5,327,000	$	8,800,000	$	4,100,000	$	—
Operating Lease Obligations	7,160,000		2,973,000		3,464,000		481,000		242,000
Totals	$	25,387,000	$	8,300,000	$	12,264,000	$	4,581,000	$	242,000

(1) Represents principal and interest payments on our notes payable, which are included on our Balance Sheet.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 of our Financial Statements under Part I, Item 1, for a discussion on the impact, if any, of the recently pronounced accounting standards.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Except for the adoption of Accounting Standards Update No. 2016-02 (Leases) noted below, there have been no material changes to our critical accounting policies and estimates from those set forth in our Annual Report on Form 10-K for the year ended December 31, 2018.

We adopted ASU 2016-02 (Leases) as of January 1, 2019. As a result of the adoption of the new lease accounting guidance, we recognized on January 1, 2018 (the beginning of the earliest period presented): (a) a lease liability of $10.3 million, which represents the present value of the remaining lease payments of $11,000,000, discounted using

23

our incremental borrowing rate at the time of adoption of the respective leases, and (b) a right-to-use asset of $10.3 million, which represents the total lease liability adjusted for any unamortized initial direct costs.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

Commodities Risk & Risk Management. To reduce the price change risks associated with holding fixed price commodity positions, we generally take opposite and offsetting positions by entering into commodity futures contracts (either a straight or options futures contract) on a regulated commodity futures exchange, the Chicago Board of Trade. While hedging activities reduce the risk of loss from changing market prices, such activities also limit the gain potential which otherwise could result from these significant fluctuations in market prices. Our policy is generally to maintain a hedged position within limits, but we can be long or short at any time. Our profitability is primarily derived from margins on soybeans processed, not from hedging transactions. Our management does not anticipate that hedging activities will have a significant impact on future operating results or liquidity. Hedging arrangements do not protect against nonperformance of a cash contract.

At any one time, our inventory and purchase contracts for delivery to our facility may be substantial. We have risk management policies and procedures that include net position limits. They are defined by commodity, and include both trader and management limits. This policy and procedure triggers a review by management when any trader is outside of position limits. The position limits are reviewed at least annually with the board of managers. We monitor current market conditions and may expand or reduce the limits in response to changes in those conditions.

An adverse change in market prices would not materially affect our profitability since we generally take opposite and offsetting positions by entering into commodity futures and forward contracts as economic hedges of price risk.

Foreign Currency Risk. We conduct essentially all of our business in U.S. dollars and have minimal direct risk regarding foreign currency fluctuations. Foreign currency fluctuations do, however, impact the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of and demand for U.S. agricultural products compared to the same products offered by foreign suppliers.

An adverse change in market prices would not materially affect our profitability since we generally take opposite and offsetting positions by entering into commodity futures and forward contracts as economic hedges of price risk.

Interest Rate Risk. We manage exposure to interest rate changes by using variable rate loan agreements with fixed rate options. Long-term loan agreements can utilize the fixed option through maturity; however, the revolving ability to pay down and borrow back would be eliminated once the funds were fixed.

As of September 30, 2019, we had $603,342 in fixed rate debt outstanding and $36 million of variable rate lines of credit. Interest rate changes impact the amount of our interest payments and, therefore, our future earnings and cash flows. Assuming other variables remain constant, a 1.0% increase in interest rates on our variable rate debt could have an estimated impact on profitability of approximately $360,000 per year.

Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Based on their evaluation as of the end of the period covered by this quarterly report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control Over Financial Reporting. There were no changes to our internal controls over financial reporting that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting during the quarter ended September 30, 2019.

24

PART II – OTHER INFORMATION

Item 1.    Legal Proceedings.

From time to time in the ordinary course of our business, we may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual dispute. We carry insurance that provides protection against general commercial liability claims, claims against our directors, officer and employees, business interruption, automobile liability, and workers' compensation. We are not currently involved in any material legal proceedings and are not aware of any potential claims.

Item 1A. Risk Factors.

During the quarter ended September 30, 2019, there were no material changes to the Risk Factors disclosed in Item 1A (Part I) of our 2018 Annual Report on Form 10-K.

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.

Item 6.    Exhibits.

Exhibit Number	Description
3.1(i)	Articles of Organization (1)
3.1(ii)	Operating Agreement, as amended (2)
3.1(iii)	Articles of Amendment to Articles of Organization (3)
4.1	Form of Class A Unit Certificate (4)
31.1	Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer
32.1	Section 1350 Certification by Chief Executive Officer
32.2	Section 1350 Certification by Chief Financial Officer

____________________________________________________________________________

(1) Incorporated by reference from Appendix B to the information statement/prospectus filed as a part of the issuer’s Registration Statement on Form S-4 (File No. 333-75804).

(2) Incorporated by reference from the same numbered exhibit to the issuer’s Form 8-K filed on June 22, 2017.

(3) Incorporated by reference from the same numbered exhibit to the issuer’s Form 10-Q filed on August 14, 2002.

(4) Incorporated by reference from the same numbered exhibit to the issuer’s Registration Statement on Form S-4 (File No. 333-75804).

25

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
Dated:	November 7, 2019	By	/s/ Thomas Kersting
			Thomas Kersting, Chief Executive Officer
			(Principal Executive Officer)
Dated:	November 7, 2019	By	/s/ Mark Hyde
			Mark Hyde, Chief Financial Officer
			(Principal Financial Officer)

26

EX-31.1

Exhibit 31.1

Certification

I, Thomas Kersting, certify that:

1. I have reviewed the report on Form 10-Q of South Dakota Soybean Processors, LLC for the quarter ended September 30, 2019;

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 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 the Exchange Act Rules 13a-15(f) and 15(d)-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 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;

5. The registrant’s other certifying officer 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 data; 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: November 7, 2019

/s/ Thomas Kersting

Thomas Kersting

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification

I, Mark Hyde, certify that:

1. I have reviewed the report on Form 10-Q of South Dakota Soybean Processors, LLC for the quarter ended September 30, 2019;

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 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 the Exchange Act Rules 13a-15(f) and 15(d)-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 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;

5. The registrant’s other certifying officer 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 data; 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: November 7, 2019

/s/ Mark Hyde

Mark Hyde

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 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 the Quarterly Report of South Dakota Soybean Processors, LLC (the “Company”) on Form 10-Q for the quarter ending September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas Kersting, the Chief Executive Officer (Principal Executive Officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of September 30, 2019 (the last date of the period covered by the Report).

Dated:	November 7, 2019	By	/s/ Thomas Kersting
			Thomas Kersting, Chief Executive Officer
			(Principal Executive Officer)

EX-32.2

Exhibit 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 the Quarterly Report of South Dakota Soybean Processors, LLC (the “Company”) on Form 10-Q for the quarter ending September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Hyde, the Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of September 30, 2019 (the last date of the period covered by the Report).

Dated:	November 7, 2019	By	/s/ Mark Hyde
			Mark Hyde, Chief Financial Officer
			(Principal Financial and Accounting Officer)

XML

Principal Activity and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Disaggregation of Revenue

The following table presents a disaggregation of revenue from contracts with customers for the three and nine month periods ended September 30, 2019 and 2018, by product type:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Soybean meal and hulls	$	57,332,025	$	70,011,833	$	181,532,951	$	195,009,313
Soybean oil and oil byproducts	27,669,354		30,374,393		95,766,824		97,164,542
Totals	$	85,001,379	$	100,386,226	$	277,299,775	$	292,173,855

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Investments in Related Parties (Tables)

9 Months Ended

Sep. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Method Investments

The results of operations and financial position of the Company's equity method investment in Prairie AquaTech, LLC as of September 30, 2019 and December 31, 2018 and for the three and nine-month periods ended September 30, 2019 and 2018 are summarized below.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
Condensed income statement:
Revenues	$	315,130		$	476,250	$	598,223		$	762,359
Expenses	(733,092		)	136,606		(2,159,700		)	(1,145,481		)
Other income (expense)	10,268			48,067		30,183			(172,071		)
Net income (loss)	$	(407,694	)	$	660,923	$	(1,531,294	)	$	(555,193	)

	September 30, 2019		December 31, 2018
Condensed balance sheet information:
Assets	$	5,472,206	$	7,264,092
Liabilities	362,044		610,789
Equity	5,110,162		6,653,303

XML

Operating Leases - Components of Operating Lease Costs (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Lessee, Lease, Description [Line Items]
Operating lease costs	$ 787,103	$ 796,846	$ 2,343,735	$ 2,403,436
Cost of revenues - Freight and rail
Lessee, Lease, Description [Line Items]
Operating lease costs	766,022	787,306	2,302,012	2,369,318
Cost of revenues - Production
Lessee, Lease, Description [Line Items]
Operating lease costs	17,973	6,306	32,606	25,665
Administration expenses
Lessee, Lease, Description [Line Items]
Operating lease costs	$ 3,108	$ 3,234	$ 9,117	$ 8,453

XML

Long-Term Debt (Details 1)	Sep. 30, 2019 USD ($)
Debt Disclosure [Abstract]
2020	$ 4,603,342
2021	4,000,000
2022	4,000,000
2023	4,000,000
Long-term Debt	$ 16,603,342

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Derivative Instruments and Hedging Activities (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Derivatives not designated as hedging instruments:
Net Gain (Loss) Recognized on Derivative Activities	$ 2,085,842	$ 4,694,141	$ 2,983,943	$ 3,059,988
Commodity contracts
Derivatives not designated as hedging instruments:
Net Gain (Loss) Recognized on Derivative Activities	2,188,931	4,607,791	3,197,752	2,801,898
Foreign exchange contracts
Derivatives not designated as hedging instruments:
Net Gain (Loss) Recognized on Derivative Activities	(10,091)	46,342	34,738	6,158
Interest rate caps and floors
Derivatives not designated as hedging instruments:
Net Gain (Loss) Recognized on Derivative Activities	$ (92,998)	$ 40,008	$ (248,547)	$ 251,932

XML

Property and Equipment

9 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

The following is a summary of the Company's property and equipment at September 30, 2019 and December 31, 2018:

	2019							2018
	Cost		Accumulated Depreciation			Net		Net
Land	$	516,326	$	—		$	516,326	$	516,326
Land improvements	2,043,236		(581,255		)	1,461,981		1,556,183
Buildings and improvements	21,602,738		(9,346,014		)	12,256,724		12,588,664
Machinery and equipment	79,613,657		(43,219,649		)	36,394,008		38,513,796
Railroad cars	1,238,508		(24,770		)	1,213,738		1,232,315
Company vehicles	146,754		(106,417		)	40,337		16,307
Furniture and fixtures	1,526,779		(1,047,875		)	478,904		543,801
Construction in progress	8,428,129		—			8,428,129		4,100,622
Totals	$	115,116,127	$	(54,325,980	)	$	60,790,147	$	59,068,014

Depreciation of property and equipment was $1,067,076 and $1,087,935 for the three months ended September 30, 2019 and 2018, respectively, and $3,197,493 and $3,085,472 for the nine months ended September 30, 2019 and 2018, respectively.

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Accounts Receivable

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Accounts Receivable

Accounts Receivable

Accounts receivable are considered past due when payments are not received on a timely basis in accordance with the Company’s credit terms, which is generally 30 days from invoice date. Accounts considered uncollectible are written off. The Company’s estimate of the allowance for doubtful accounts is based on historical experience, its evaluation of the current status of receivables, and unusual circumstances, if any.

The following table presents the aging analysis of trade receivables as of September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Past due:
Less than 30 days past due	$	3,674,172	$	5,362,970
30-60 days past due	312,339		387,670
60-90 days past due	14,279		101,687
Greater than 90 days past due	15,782		84
Total past due	4,016,572		5,852,411
Current	13,943,298		14,698,027
Totals	$	17,959,870	$	20,550,438

The following table provides information regarding the Company’s allowance for doubtful accounts receivable as of September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Balances, beginning of period	$	—	$	—
Amounts charged (credited) to costs and expenses	—		—
Additions (deductions)	—		—
Balances, end of period	$	—	$	—

In general, cash is applied to the oldest outstanding invoice first, unless payment is for a specified invoice.  The Company, on a case by case basis, may charge a late fee of 1.5% per month on past due receivables.

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Operating Leases (Notes)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Operating Leases

Operating Leases

The Company has several operating leases for railcars. These leases have terms ranging from 3-18 years and do not have renewal terms provided. The leases require the Company to maintain the condition of the railcars, restrict the use of the railcars to specified products, such as soybean meal, hulls or oil, limit usage to the continental United States, Canada or Mexico, require approval to sublease to other entities, and require the Company's submission of its financial statements. Lease expense for all railcars was $766,022 and $787,306 for the three months ended September 30, 2019 and 2018, respectively, and $2,302,012 and $2,369,318 for the nine months ended September 30, 2019 and 2018, respectively.

The following is a schedule of the Company's operating leases for railcars as of September 30, 2019:

Lessor	Quantity of Railcars	Commencement Date	Maturity Date	Monthly Payment
Wells Fargo Rail	112	8/1/2017	7/31/2022	$	52,557
Wells Fargo Rail	107	1/1/2018	12/31/2022	35,845
Wells Fargo Rail	7	1/1/2004	12/31/2021	2,926
Wells Fargo Rail	15	1/1/2004	12/31/2021	5,850
Wells Fargo Rail	8	1/1/2015	12/31/2021	3,600
Trinity Capital	88	8/1/2002	7/31/2020	33,704
Trinity Capital	29	12/1/2015	11/30/2020	28,536
Trinity Capital	20	10/1/2015	9/30/2020	13,600
Midwest Railcar Corporation	64	1/1/2015	12/31/2021	27,200
American Railcar Leasing	30	7/1/2015	6/30/2021	30,780
Andersons Railcar Leasing Co.	10	7/1/2018	6/30/2023	5,000
Andersons Railcar Leasing Co.	20	7/1/2019	6/30/2026	11,300
GATX Corporation	15	7/1/2017	6/30/2020	4,500
	525			$	255,398

The Company also has a number of other operating leases for machinery and equipment. These leases have terms ranging from 3-7 years; however, most of these leases have automatic renewal terms. These leases require monthly payments of $3,912. Rental expense under these other operating leases was $21,081 and $9,540 for the three months ended September 30, 2019 and 2018, respectively, and $41,723 and $34,118 for the nine-month periods ended September 30, 2019 and 2018, respectively.

Operating leases are included in right-to-use lease assets, current operating lease liabilities, and long-term lease liabilities on the condensed balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company's secured incremental borrowing rates or implicit rates, when readily determinable. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

Lease expense for these operating leases is recognized on a straight-line basis over the lease terms. The components of lease costs recognized within our condensed statements of operations for the nine-month periods ended September 30, 2019 and 2018 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenues - Freight and rail	$	766,022	$	787,306	$	2,302,012	$	2,369,318
Cost of revenues - Production	17,973		6,306		32,606		25,665
Administration expenses	3,108		3,234		9,117		8,453
Total operating lease costs	$	787,103	$	796,846	$	2,343,735	$	2,403,436

The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of September 30, 2019:

	Railcars			Other			Total
Twelve-month periods ended September 30:
2020	$	2,931,312		$	41,377		$	2,972,689
2021	2,065,429			38,263			2,103,692
2022	1,322,596			37,640			1,360,236
2023	288,135			36,696			324,831
2024	135,600			20,818			156,418
Thereafter	237,300			4,943			242,243
Total lease payments	6,980,372			179,737			7,160,109
Less amount of lease payments representing interest	(404,268		)	(19,996		)	(424,264		)
Total present value of lease payments	$	6,576,104		$	159,741		$	6,735,845

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net revenues	$ 85,001,379	$ 100,386,226	$ 277,299,775	$ 292,173,855
Cost of revenues:
Production	8,889,751	6,691,112	22,583,763	19,664,019
Brokerage fees	146,960	155,753	476,047	466,707
Total cost of revenues	82,284,471	87,724,125	262,246,506	274,537,541
Gross profit (loss)	2,716,908	12,662,101	15,053,269	17,636,314
Operating expenses:
Administration	848,890	1,009,383	2,781,405	2,791,039
Operating income (loss)	1,868,018	11,652,718	12,271,864	14,845,275
Other income (expense):
Interest expense	(196,440)	(257,772)	(656,729)	(841,503)
Other non-operating income (expense)	(17,253)	162,989	402,213	557,865
Patronage dividend income	0	49,735	169,456	146,258
Total other income (expense)	(213,693)	(45,048)	(85,060)	(137,380)
Income (loss) before income taxes	1,654,325	11,607,670	12,186,804	14,707,895
Income tax benefit (expense)	0	0	(600)	(1,960)
Net income (loss)	$ 1,654,325	$ 11,607,670	$ 12,186,204	$ 14,705,935
Basic and diluted earnings per capital unit:
Net income (in dollars per share)	$ 0.05	$ 0.38	$ 0.40	$ 0.48
Weighted average number of capital units outstanding for calculation of basic and diluted earnings per capital unit (in shares)	30,419,000	30,419,000	30,419,000	30,419,000
Product
Cost of revenues:
Cost of products and services	$ 65,035,124	$ 70,997,345	$ 212,714,179	$ 227,452,292
Freight and rail
Cost of revenues:
Cost of products and services	$ 8,212,636	$ 9,879,915	$ 26,472,517	$ 26,954,523

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Related Party Transactions (Notes)

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company sold soybean products to Prairie AquaTech, LLC and Prairie AquaTech Manufacturing, LLC totaling $648,215 and $152,838 during the three months ended September 30, 2019 and 2018, respectively, and $942,195 and $233,233 during the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, Prairie AquaTech, LLC and Prairie AquaTech Manufacturing, LLC owed the Company $90,414 and $18,540, respectively.

The Company has entered into agreements with Prairie AquaTech Manufacturing, LLC to perform various management services and to serve as the owner's representative during the construction of its new manufacturing facility adjacent to the Company's plant in Volga, South Dakota. The Company received a total of $1.72 million in compensation for those services, which was recorded in deferred liabilities on the Company's balance sheet. As of September 30, 2019 and December 31, 2018, the balance remaining in deferred liabilities was $178,611 and $777,342, respectively. The Company recognized revenues from management services of $100,834 and $27,693 during the three-month periods ended September 30, 2019 and 2018, respectively, and $666,431 and $55,385 during the nine months endedSeptember 30, 2019 and 2018, respectively.

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Property and Equipment (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Cost	$ 115,116,127	$ 110,314,779
Accumulated Depreciation	(54,325,980)	(51,246,765)
Total property and equipment, net	60,790,147	59,068,014
Land
Property, Plant and Equipment [Line Items]
Cost	516,326
Accumulated Depreciation	0
Total property and equipment, net	516,326	516,326
Land improvements
Property, Plant and Equipment [Line Items]
Cost	2,043,236
Accumulated Depreciation	(581,255)
Total property and equipment, net	1,461,981	1,556,183
Buildings and improvements
Property, Plant and Equipment [Line Items]
Cost	21,602,738
Accumulated Depreciation	(9,346,014)
Total property and equipment, net	12,256,724	12,588,664
Machinery and equipment
Property, Plant and Equipment [Line Items]
Cost	79,613,657
Accumulated Depreciation	(43,219,649)
Total property and equipment, net	36,394,008	38,513,796
Railroad cars
Property, Plant and Equipment [Line Items]
Cost	1,238,508
Accumulated Depreciation	(24,770)
Total property and equipment, net	1,213,738	1,232,315
Company vehicles
Property, Plant and Equipment [Line Items]
Cost	146,754
Accumulated Depreciation	(106,417)
Total property and equipment, net	40,337	16,307
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Cost	1,526,779
Accumulated Depreciation	(1,047,875)
Total property and equipment, net	478,904	543,801
Construction in progress
Property, Plant and Equipment [Line Items]
Cost	8,428,129
Accumulated Depreciation	0
Total property and equipment, net	$ 8,428,129	$ 4,100,622

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Accounts Receivable (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	$ 4,016,572	$ 5,852,411
Current	13,943,298	14,698,027
Accounts Receivable, Gross, Current	17,959,870	20,550,438
Less than 30 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	3,674,172	5,362,970
30-60 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	312,339	387,670
60-90 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	14,279	101,687
Greater than 90 days past due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total past due	$ 15,782	$ 84

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Fair Value of Financial Instruments (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Financial assets:
Inventory	$ 52,183,621	$ 36,312,241
Margin deposits	2,764,721	2,350,852
Fair Value, Inputs, Level 1
Financial assets:
Inventory	925,503	973,710
Margin deposits	2,764,721	2,350,852
Fair Value, Inputs, Level 2
Financial assets:
Inventory	51,258,118	35,338,531
Margin deposits	0	0
Fair Value, Inputs, Level 3
Financial assets:
Inventory	0	0
Margin deposits	$ 0	$ 0

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Operating activities
Net income (loss)	$ 12,186,204	$ 14,705,935
Charges and credits to net income not affecting cash:
Depreciation and amortization	3,199,108	3,097,587
Net (gain) loss recognized on derivative activities	(2,983,943)	(3,059,988)
Gain on sales of property and equipment	(6,687)	(271,933)
Loss on equity method investment	135,588	61,996
Non-cash patronage dividends	(42,364)	(24,131)
Change in current assets and liabilities	(20,331,307)	202,992
Net cash provided by (used for) operating activities	(7,843,401)	14,712,458
Investing activities
Purchase of investments	0	(5,000,000)
Retirement of patronage dividends	32,288	0
Proceeds from sales of property and equipment	64,800	309,870
Purchase of property and equipment	(4,977,738)	(5,874,304)
Net cash provided by (used for) investing activities	(4,880,650)	(10,564,434)
Financing activities
Change in excess of outstanding checks over bank balances	1,299,234	(285,932)
Net proceeds (payments) from seasonal borrowings	3,738,236	0
Distributions to members	(15,209,500)	(5,075,303)
Payments for debt issue costs	0	(10,500)
Proceeds from long-term debt	71,476,467	47,306,495
Principal payments on long-term debt	(55,538,347)	(46,074,101)
Net cash provided by (used for) financing activities	5,766,090	(4,139,341)
Net change in cash and cash equivalents	(6,957,961)	8,683
Cash and cash equivalents, beginning of period	7,197,082	683,523
Cash and cash equivalents, end of period	239,121	692,206
Supplemental disclosures of cash flow information
Interest	604,727	801,815
Income taxes	$ 0	$ 0

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

As of September 30, 2019, the Company had unpaid commitments of approximately $87,000 for construction and acquisition of property and equipment, all of which is expected to be incurred by December 2019.

From time to time in the ordinary course of our business, the Company may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual dispute. The Company carries insurance that provides protection against general commercial liability claims, claims against our directors, officer and employees, business interruption, automobile liability, and workers' compensation. The Company is not currently involved in any material legal proceedings and are not aware of any potential claims.

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 07, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	SOUTH DAKOTA SOYBEAN PROCESSORS LLC
Entity Central Index Key	0001163609
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		30,419,000
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Current Reporting Status	Yes

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Investments in Related Parties

9 Months Ended

Sep. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments in Related Parties

  Investments in Related Parties

The Company accounts for its investment in Prairie AquaTech, LLC using the equity method due to the Company's ability to exercise significant influence based on its position on the board of managers. The Company recognized gains (losses) of $(36,099) and $91,781 during the three months ended September 30, 2019 and 2018, respectively, and $(135,588) and $(61,996) during the nine months ended September 30, 2019 and 2018, respectively, which is included in other non-operating income (expense).

The Company accounts for the investments in Prairie AquaTech Investments, LLC and Prairie AquaTech Manufacturing, LLC using the cost method. In the construction phase of the facility, the Company is acting as the Owner’s representative and providing various construction and management services. However, once the facility is operational in fiscal year 2019, the Company will not be able to exercise significant influence or control over any aspect of operations. Under the cost method, the investments are recorded at cost and the Company will record any dividends as income when received.

The results of operations and financial position of the Company's equity method investment in Prairie AquaTech, LLC as of September 30, 2019 and December 31, 2018 and for the three and nine-month periods ended September 30, 2019 and 2018 are summarized below.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
Condensed income statement:
Revenues	$	315,130		$	476,250	$	598,223		$	762,359
Expenses	(733,092		)	136,606		(2,159,700		)	(1,145,481		)
Other income (expense)	10,268			48,067		30,183			(172,071		)
Net income (loss)	$	(407,694	)	$	660,923	$	(1,531,294	)	$	(555,193	)

	September 30, 2019		December 31, 2018
Condensed balance sheet information:
Assets	$	5,472,206	$	7,264,092
Liabilities	362,044		610,789
Equity	5,110,162		6,653,303

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Inventories

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

The Company’s inventories consist of the following at September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Finished goods	$	26,736,079	$	21,283,354
Raw materials	25,531,163		15,206,526
Supplies & miscellaneous	310,312		226,134
Totals	$	52,577,554	$	36,716,014

Finished goods and raw materials are valued at estimated market value, which approximates net realizable value. In addition, futures and option contracts are marked to market through cost of revenues, with unrealized gains and losses recorded in the above inventory amounts. Supplies and other inventories are stated at net realizable value.

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Member Distribution

9 Months Ended

Sep. 30, 2019

Member Distribution [Abstract]

Member Distribution

Member Distribution

On February 5, 2019, the Company’s Board of Managers approved a cash distribution of approximately $15.2 million, or 50.0¢ per capital unit. The distribution was paid in accordance with the Company’s operating agreement and distribution policy on February 7, 2019.

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Inventories (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Finished goods	$ 26,736,079	$ 21,283,354
Raw materials	25,531,163	15,206,526
Supplies & miscellaneous	310,312	226,134
Totals	$ 52,577,554	$ 36,716,014

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Principal Activity and Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenue	$ 85,001,379	$ 100,386,226	$ 277,299,775	$ 292,173,855
Soybean meal and hulls
Disaggregation of Revenue [Line Items]
Revenue	57,332,025	70,011,833	181,532,951	195,009,313
Soybean oil and oil byproducts
Disaggregation of Revenue [Line Items]
Revenue	$ 27,669,354	$ 30,374,393	$ 95,766,824	$ 97,164,542

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Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Past Due Financing Receivables

The following table presents the aging analysis of trade receivables as of September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Past due:
Less than 30 days past due	$	3,674,172	$	5,362,970
30-60 days past due	312,339		387,670
60-90 days past due	14,279		101,687
Greater than 90 days past due	15,782		84
Total past due	4,016,572		5,852,411
Current	13,943,298		14,698,027
Totals	$	17,959,870	$	20,550,438

Schedule of Accounts, Notes, Loans and Financing Receivable

The following table provides information regarding the Company’s allowance for doubtful accounts receivable as of September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Balances, beginning of period	$	—	$	—
Amounts charged (credited) to costs and expenses	—		—
Additions (deductions)	—		—
Balances, end of period	$	—	$	—

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of Debt

The following is a summary of the Company's long-term debt at September 30, 2019 and December 31, 2018:

	September 30, 2019			December 31, 2018
Revolving term loan from CoBank, interest at variable rates (4.47% and 4.96% at September 30, 2019 and December 31, 2018, respectively), secured by substantially all property and equipment. Loan matures September 20, 2023.	$	16,000,000		$	—
Note payable to Brookings Regional Railroad Authority, due in annual principal and interest installments of $75,500, interest rate at 2.00%, secured by railroad track assets. Note matures June 1, 2020.	603,342			665,222
Total debt before debt issuance costs	16,603,342			665,222
Less current maturities	(4,603,342		)	(61,964		)
Less debt issuance costs, net of amortization of $5,385 and $3,769 as of September 30, 2019 and December 31, 2018, respectively	(8,615		)	(10,231		)
Total long-term debt	$	11,991,385		$	593,027

Schedule of Maturities of Long-term Debt

The following are minimum principal payments on long-term debt obligations for the twelve-month periods ended September 30:

2020	$	4,603,342
2021	4,000,000
2022	4,000,000
2023	4,000,000
Total	$	16,603,342

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Operating Leases - Schedule of Operating Leases (Details)	9 Months Ended
	Sep. 30, 2019 USD ($) railcar
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	525
Monthly Payment | $	$ 255,398
Wells Fargo Rail, Maturity Date July 31, 2022
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	112
Monthly Payment | $	$ 52,557
Wells Fargo Rail, Maturity Date Dec 31, 2022
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	107
Monthly Payment | $	$ 35,845
Wells Fargo Rail, Maturity Date Dec, 31, 2011 With Monthly Payment $2926
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	7
Monthly Payment | $	$ 2,926
Wells Fargo Rail, Maturity Date Dec 31, 2021 With Monthly Payment $5850
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	15
Monthly Payment | $	$ 5,850
Wells Fargo Rail, Maturity Date Dec 31, 2021 With Monthly Payment $3600
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	8
Monthly Payment | $	$ 3,600
Trinity Capital, Maturity Date July 31, 2020
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	88
Monthly Payment | $	$ 33,704
Trinity Capital, Maturity Date Nov 30, 2020
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	29
Monthly Payment | $	$ 28,536
Trinity Capital, Maturity Date Sep 30, 2020
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	20
Monthly Payment | $	$ 13,600
Midwest Railcar Corporation, Maturity Date Dec 31, 2021
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	64
Monthly Payment | $	$ 27,200
American Railcar Leasing, Maturity Date Jun 30, 2021
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	30
Monthly Payment | $	$ 30,780
Andersons Railcar Leasing Co. Maturity Date Jun 30, 2023
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	10
Monthly Payment | $	$ 5,000
Andersons Railcar Leasing Co. Maturity Date Jun 30, 2026
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	20
Monthly Payment | $	$ 11,300
GATX Corporation, Maturity Date Jun 30, 2020
Lessee, Lease, Description [Line Items]
Quantity of Railcars | railcar	15
Monthly Payment | $	$ 4,500

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Long-Term Debt (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Revolving term loan from CoBank, interest at variable rates (4.47% and 4.96% at September 30, 2019 and December 31, 2018, respectively), secured by substantially all property and equipment. Loan matures September 20, 2023.	$ 16,000,000	$ 0
Note payable to Brookings Regional Railroad Authority, due in annual principal and interest installments of $75,500, interest rate at 2.00%, secured by railroad track assets. Note matures June 1, 2020.	603,342	665,222
Total debt before debt issuance costs	16,603,342	665,222
Less current maturities	(4,603,342)	(61,964)
Less debt issuance costs, net of amortization of $5,385 and $3,769 as of September 30, 2019 and December 31, 2018, respectively	(8,615)	(10,231)
Total long-term debt	11,991,385	593,027
Accumulated amortization	5,385	$ 3,769
Revolving Term Loan
Debt Instrument [Line Items]
Revolving term loan from CoBank, interest at variable rates (4.47% and 4.96% at September 30, 2019 and December 31, 2018, respectively), secured by substantially all property and equipment. Loan matures September 20, 2023.	$ 24,000,000
Revolving term loan from CoBank, interest rates	4.47%	4.96%
Notes Payable, Other Payables
Debt Instrument [Line Items]
Debt installments	$ 75,500
Interest Rate	2.00%

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Derivative Instruments and Hedging Activities (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Derivatives not designated as hedging instruments:
Asset Derivatives	$ 3,649,679	$ 3,825,798
Liability Derivatives	$ 3,164,847	$ 3,023,028
Commodity contracts
Derivatives not designated as hedging instruments:
Balance Sheet Classification	Current Assets	Current Assets
Asset Derivatives	$ 3,633,222	$ 3,696,540
Liability Derivatives	$ 2,707,719	$ 2,722,830
Foreign exchange contracts
Derivatives not designated as hedging instruments:
Balance Sheet Classification	Current Assets	Current Assets
Asset Derivatives	$ 16,457	$ 129,258
Liability Derivatives	$ 8,509	$ 100,730
Interest rate caps and floors
Derivatives not designated as hedging instruments:
Balance Sheet Classification	Current Liabilities	Current Liabilities
Asset Derivatives	$ 0	$ 0
Liability Derivatives	$ 448,619	$ 199,468

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Commitments and Contingencies (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Unpaid commitments for construction and acquisition of property and equipment	$ 87

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Property and Equipment (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Property, Plant and Equipment [Abstract]
Depreciation	$ 1,067,076	$ 1,087,935	$ 3,197,493	$ 3,085,472

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Accounts Receivable (Details 1) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Receivables [Abstract]
Balances, beginning of period	$ 0	$ 0
Amounts charged (credited) to costs and expenses	0	0
Additions (deductions)	0	0
Balances, end of period	$ 0	$ 0

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables set forth financial assets and liabilities measured at fair value in the condensed balance sheets and the respective levels to which fair value measurements are classified within the fair value hierarchy as of September 30, 2019 and December 31, 2018:

	Fair Value as of September 30, 2019
	Level 1		Level 2		Level 3		Total
Financial assets:
Inventory	$	925,503	$	51,258,118	$	—	$	52,183,621
Margin deposits (deficits)	$	2,764,721	$	—	$	—	$	2,764,721

	Fair Value as of December 31, 2018
	Level 1		Level 2		Level 3		Total
Financial assets:
Inventory	$	973,710	$	35,338,531	$	—	$	36,312,241
Margin deposits	$	2,350,852	$	—	$	—	$	2,350,852

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Principal Activity and Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principal Activity and Significant Accounting Policies

Principal Activity and Significant Accounting Policies

The unaudited condensed financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although South Dakota Soybean Processors, LLC (the “Company”, “LLC”, “we”, “our”, or “us”) believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in the accompanying condensed financial statements. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full year due in part to the seasonal nature of some of the Company’s businesses. The balance sheet data as of December 31, 2018 has been derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

These statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2018, included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 20, 2019.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue

The Company accounts for all of its revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers.

The Company principally generates revenue from merchandising and transporting manufactured agricultural products used as ingredients in food, feed, energy and industrial products. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any amounts collected on behalf of third parties (e.g. - taxes). The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product to a customer. Control transfer typically occurs when goods are shipped from our facilities or at other predetermined control transfer points (for instance, destination terms). Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of revenues. Accordingly, amounts billed to customers for such costs are included as a component of revenues.

Payments received in advance to the transfer of goods, or "contract liabilities", are included in "Deferred liabilities - current" on the Company's condensed balance sheets. These customer prepayments totaled $140,396 and $15,042 as of September 30, 2019 and December 31, 2018, respectively. Of the $15,042 balance as of December 31, 2018, contract liabilities recognized as revenues were $0 and $15,042 for the three and nine month periods ended September 30, 2019, respectively.

The following table presents a disaggregation of revenue from contracts with customers for the three and nine month periods ended September 30, 2019 and 2018, by product type:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Soybean meal and hulls	$	57,332,025	$	70,011,833	$	181,532,951	$	195,009,313
Soybean oil and oil byproducts	27,669,354		30,374,393		95,766,824		97,164,542
Totals	$	85,001,379	$	100,386,226	$	277,299,775	$	292,173,855

Recent accounting pronouncements

Effective January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02 (Leases). The standard requires companies to recognize operating lease assets and liabilities on the balance sheet and disclose key information regarding leasing arrangements. The Company has elected the package of practical expedients permitted in ASC Topic 842. Accordingly, the Company accounted for all its leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain leases under Topic 842, (b) whether classification of the operating leases would be different in accordance with ASC Topic 842, or (c) whether the unamortized initial direct costs before transition adjustments, if any, would have met the definition of initial direct costs in ASC Topic 842 at lease commencement. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2018 (the beginning of the earliest period presented): (a) a lease liability of $10.3 million, which represents the present value of the remaining lease payments of $11,000,000, discounted using the Company's incremental borrowing rate at the time of adoption of the respective leases, and (b) a right-to-use asset of $10.3 million, which represents the total lease liability adjusted for any unamortized initial direct costs. The Company also elected not to recognize and measure any short-term lease, which is a lease that, at the commencement date, has a term of 12 months or less and does not contain an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

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Condensed Consolidated Balance Sheets [Parenthetical] - Capital Unit, Class A - shares	Sep. 30, 2019	Dec. 31, 2018
Common stock, shares issued	30,419,000	30,419,000
Common stock, shares outstanding	30,419,000	30,419,000

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Long-Term Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

The following is a summary of the Company's long-term debt at September 30, 2019 and December 31, 2018:

	September 30, 2019			December 31, 2018
Revolving term loan from CoBank, interest at variable rates (4.47% and 4.96% at September 30, 2019 and December 31, 2018, respectively), secured by substantially all property and equipment. Loan matures September 20, 2023.	$	16,000,000		$	—
Note payable to Brookings Regional Railroad Authority, due in annual principal and interest installments of $75,500, interest rate at 2.00%, secured by railroad track assets. Note matures June 1, 2020.	603,342			665,222
Total debt before debt issuance costs	16,603,342			665,222
Less current maturities	(4,603,342		)	(61,964		)
Less debt issuance costs, net of amortization of $5,385 and $3,769 as of September 30, 2019 and December 31, 2018, respectively	(8,615		)	(10,231		)
Total long-term debt	$	11,991,385		$	593,027

The Company entered into an agreement as of March 28, 2017 with CoBank to amend and restate its Credit Agreement, which includes both the revolving term and seasonal loans. Under the terms and conditions of the Credit Agreement, CoBank agreed to make advances to the Company for up to $24,000,000 on the revolving term loan with a variable effective interest rate of 4.47%. The available commitment decreases in scheduled periodic increments of $2,000,000 every six months starting March 20, 2018 until maturity on September 20, 2023. The Company pays a 0.40% annual commitment fee on any funds not borrowed. The debt issuance costs of $14,000 paid by the Company on this amendment will be amortized over the term of loan. The principal balance outstanding on the revolving term loan was $16,000,000 and $0 as of September 30, 2019 and December 31, 2018, respectively. There were no remaining commitments available to borrow on the revolving term loan as of September 30, 2019.

Under this agreement, the Company is subject to compliance with standard financial covenants and the maintenance of certain financial ratios. The Company was in compliance with all covenants and conditions with CoBank as of September 30, 2019.

Effective March 1, 2013, the State of South Dakota Department of Transportation agreed to loan the Brookings County Regional Railway Authority $964,070 for purposes of making improvements to the railway infrastructure near the Company’s soybean processing facility in Volga, South Dakota. In consideration of this secured loan, the Company agreed to provide a guarantee to the State of South Dakota Department of Transportation for the full amount of the loan, plus interest. This guaranty was converted into a direct obligation of the Company’s on October 16, 2013, when the Company received the entire loan proceeds and assumed responsibility for paying the annual principal and interest payments.

The following are minimum principal payments on long-term debt obligations for the twelve-month periods ended September 30:

2020	$	4,603,342
2021	4,000,000
2022	4,000,000
2023	4,000,000
Total	$	16,603,342

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Fair Value

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, this guidance establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. The three levels of hierarchy and examples are as follows:

• Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange and commodity derivative contracts listed on the Chicago Board of Trade (“CBOT”).

• Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs, such as commodity prices using forward future prices.

• Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

The following tables set forth financial assets and liabilities measured at fair value in the condensed balance sheets and the respective levels to which fair value measurements are classified within the fair value hierarchy as of September 30, 2019 and December 31, 2018:

	Fair Value as of September 30, 2019
	Level 1		Level 2		Level 3		Total
Financial assets:
Inventory	$	925,503	$	51,258,118	$	—	$	52,183,621
Margin deposits (deficits)	$	2,764,721	$	—	$	—	$	2,764,721

	Fair Value as of December 31, 2018
	Level 1		Level 2		Level 3		Total
Financial assets:
Inventory	$	973,710	$	35,338,531	$	—	$	36,312,241
Margin deposits	$	2,350,852	$	—	$	—	$	2,350,852

In accordance with ASC 825, Financial Instruments, the Company enters into various commodity derivative instruments, including futures, options, swaps and other agreements. The fair value of the Company’s commodity derivatives is determined using unadjusted quoted prices for identical instruments on the CBOT. The Company estimates the fair market value of their finished goods and raw materials inventories using the market price quotations of similar forward future contracts listed on the CBOT and adjusts for the local market adjustments derived from other grain terminals in our area.

The Company considers the carrying amount of significant classes of financial instruments on the balance sheets, including cash, accounts receivable, and accounts payable, to be reasonable estimates of fair value due to their length or maturity. The fair value of the Company’s long-term debt approximates the carrying value. The interest rates on the long-term debt are similar to rates the Company would be able to obtain currently in the market.

The Company has patronage investments in other cooperatives and common and preferred stock holdings in privately held entities. There is no market for their patronage credits or the entity’s common and preferred holdings, and it is impracticable to estimate fair value of the Company’s investments. These investments are carried on the balance sheet at original cost plus the amount of patronage earnings allocated to the Company, less any cash distributions received.

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Principal Activity and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Use of Estimates, Policy

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue, Policy

Revenue

The Company accounts for all of its revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers.

The Company principally generates revenue from merchandising and transporting manufactured agricultural products used as ingredients in food, feed, energy and industrial products. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any amounts collected on behalf of third parties (e.g. - taxes). The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product to a customer. Control transfer typically occurs when goods are shipped from our facilities or at other predetermined control transfer points (for instance, destination terms). Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of revenues. Accordingly, amounts billed to customers for such costs are included as a component of revenues.

Payments received in advance to the transfer of goods, or "contract liabilities", are included in "Deferred liabilities - current" on the Company's condensed balance sheets. These customer prepayments totaled $140,396 and $15,042 as of September 30, 2019 and December 31, 2018, respectively. Of the $15,042 balance as of December 31, 2018, contract liabilities recognized as revenues were $0 and $15,042 for the three and nine month periods ended September 30, 2019, respectively.

Recent Accounting Pronouncements

Recent accounting pronouncements

Effective January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02 (Leases). The standard requires companies to recognize operating lease assets and liabilities on the balance sheet and disclose key information regarding leasing arrangements. The Company has elected the package of practical expedients permitted in ASC Topic 842. Accordingly, the Company accounted for all its leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain leases under Topic 842, (b) whether classification of the operating leases would be different in accordance with ASC Topic 842, or (c) whether the unamortized initial direct costs before transition adjustments, if any, would have met the definition of initial direct costs in ASC Topic 842 at lease commencement. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2018 (the beginning of the earliest period presented): (a) a lease liability of $10.3 million, which represents the present value of the remaining lease payments of $11,000,000, discounted using the Company's incremental borrowing rate at the time of adoption of the respective leases, and (b) a right-to-use asset of $10.3 million, which represents the total lease liability adjusted for any unamortized initial direct costs. The Company also elected not to recognize and measure any short-term lease, which is a lease that, at the commencement date, has a term of 12 months or less and does not contain an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

The following is a summary of the Company's property and equipment at September 30, 2019 and December 31, 2018:

	2019							2018
	Cost		Accumulated Depreciation			Net		Net
Land	$	516,326	$	—		$	516,326	$	516,326
Land improvements	2,043,236		(581,255		)	1,461,981		1,556,183
Buildings and improvements	21,602,738		(9,346,014		)	12,256,724		12,588,664
Machinery and equipment	79,613,657		(43,219,649		)	36,394,008		38,513,796
Railroad cars	1,238,508		(24,770		)	1,213,738		1,232,315
Company vehicles	146,754		(106,417		)	40,337		16,307
Furniture and fixtures	1,526,779		(1,047,875		)	478,904		543,801
Construction in progress	8,428,129		—			8,428,129		4,100,622
Totals	$	115,116,127	$	(54,325,980	)	$	60,790,147	$	59,068,014

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule Of Derivatives Assets and Liabilities Not Designated As Hedging Instruments

As of September 30, 2019 and December 31, 2018, the value of the Company’s open futures, options and forward contracts was approximately $484,832 and $802,770, respectively.

		As of September 30, 2019
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets	$	3,633,222	$	2,707,719
Foreign exchange contracts	Current Assets	16,457		8,509
Interest rate caps and floors	Current Liabilities	—		448,619
Totals		$	3,649,679	$	3,164,847

		As of December 31, 2018
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets	$	3,696,540	$	2,722,830
Foreign exchange contracts	Current Assets	129,258		100,730
Interest rate caps and floors	Current Liabilities	—		199,468
Totals		$	3,825,798	$	3,023,028

Schedule Of Derivative Instruments, Net Realized and Unrealized Gain (Loss) On Derivatives Not Designated As Hedging Instruments

During the three and nine-month periods ended September 30, 2019 and 2018, net realized and unrealized gains (losses) on derivative transactions were recognized in the condensed statements of operations as follows:

	Net Gain (Loss) Recognized  on Derivative Activities for the					Net Gain (Loss) Recognized  on Derivative Activities for the
	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
Derivatives not designated as hedging instruments:
Commodity contracts	$	2,188,931		$	4,607,791	$	3,197,752		$	2,801,898
Foreign exchange contracts	(10,091		)	46,342		34,738			6,158
Interest rate swaps, caps and floors	(92,998		)	40,008		(248,547		)	251,932
Totals	$	2,085,842		$	4,694,141	$	2,983,943		$	3,059,988

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Operating Leases - Maturity Analysis of Undiscounted Cash Flows of Operating Lease Liabilities (Details)	Sep. 30, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Twelve-month periods ended September 30, 2020	$ 2,972,689
Twelve-month periods ended September 30, 2021	2,103,692
Twelve-month periods ended September 30, 2022	1,360,236
Twelve-month periods ended September 30, 2023	324,831
Twelve-month periods ended September 30, 2024	156,418
Thereafter	242,243
Total lease payments	7,160,109
Less amount of lease payments representing interest	(424,264)
Total present value of lease payments	6,735,845
Railcars
Lessee, Lease, Description [Line Items]
Twelve-month periods ended September 30, 2020	2,931,312
Twelve-month periods ended September 30, 2021	2,065,429
Twelve-month periods ended September 30, 2022	1,322,596
Twelve-month periods ended September 30, 2023	288,135
Twelve-month periods ended September 30, 2024	135,600
Thereafter	237,300
Total lease payments	6,980,372
Less amount of lease payments representing interest	(404,268)
Total present value of lease payments	6,576,104
Other
Lessee, Lease, Description [Line Items]
Twelve-month periods ended September 30, 2020	41,377
Twelve-month periods ended September 30, 2021	38,263
Twelve-month periods ended September 30, 2022	37,640
Twelve-month periods ended September 30, 2023	36,696
Twelve-month periods ended September 30, 2024	20,818
Thereafter	4,943
Total lease payments	179,737
Less amount of lease payments representing interest	(19,996)
Total present value of lease payments	$ 159,741

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Long-Term Debt (Details Textual) - USD ($)		3 Months Ended	9 Months Ended
	Mar. 01, 2013	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Line of Credit Facility [Line Items]
Advances outstanding		$ 16,000,000	$ 16,000,000		$ 0
Periodic payment, principal			$ 2,000,000
Annual commitment fee percentage on unused capacity			0.40%
Debt issuance cost			$ 0	$ 10,500
Long term debt for infrastructure improvements	$ 964,070
Revolving Term Loan
Line of Credit Facility [Line Items]
Advances outstanding		24,000,000	$ 24,000,000
Variable effective interest rate			4.47%
Maturity date			Sep. 20, 2023
Debt issuance cost		14,000
Remaining borrowing capacity		$ 0	$ 0

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Investments in Related Parties - Summarized financial information (Details) - Prairie AquaTech, LLC - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Schedule of Equity Method Investments [Line Items]
Revenues	$ 315,130	$ 476,250	$ 598,223	$ 762,359
Expenses	(733,092)	136,606	(2,159,700)	(1,145,481)
Other income (expense)	10,268	48,067	30,183	(172,071)
Net income (loss)	(407,694)	$ 660,923	(1,531,294)	$ (555,193)
Assets	5,472,206		5,472,206		$ 7,264,092
Liabilities	362,044		362,044		610,789
Equity	$ 5,110,162		$ 5,110,162		$ 6,653,303

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Operating Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Lessee, Operating Lease, Disclosure

The following is a schedule of the Company's operating leases for railcars as of September 30, 2019:

Lessor	Quantity of Railcars	Commencement Date	Maturity Date	Monthly Payment
Wells Fargo Rail	112	8/1/2017	7/31/2022	$	52,557
Wells Fargo Rail	107	1/1/2018	12/31/2022	35,845
Wells Fargo Rail	7	1/1/2004	12/31/2021	2,926
Wells Fargo Rail	15	1/1/2004	12/31/2021	5,850
Wells Fargo Rail	8	1/1/2015	12/31/2021	3,600
Trinity Capital	88	8/1/2002	7/31/2020	33,704
Trinity Capital	29	12/1/2015	11/30/2020	28,536
Trinity Capital	20	10/1/2015	9/30/2020	13,600
Midwest Railcar Corporation	64	1/1/2015	12/31/2021	27,200
American Railcar Leasing	30	7/1/2015	6/30/2021	30,780
Andersons Railcar Leasing Co.	10	7/1/2018	6/30/2023	5,000
Andersons Railcar Leasing Co.	20	7/1/2019	6/30/2026	11,300
GATX Corporation	15	7/1/2017	6/30/2020	4,500
	525			$	255,398

Lease, Cost

The components of lease costs recognized within our condensed statements of operations for the nine-month periods ended September 30, 2019 and 2018 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenues - Freight and rail	$	766,022	$	787,306	$	2,302,012	$	2,369,318
Cost of revenues - Production	17,973		6,306		32,606		25,665
Administration expenses	3,108		3,234		9,117		8,453
Total operating lease costs	$	787,103	$	796,846	$	2,343,735	$	2,403,436

Lessee, Operating Lease, Liability, Maturity

The following is a maturity analysis of the undiscounted cash flows of the operating lease liabilities as of September 30, 2019:

	Railcars			Other			Total
Twelve-month periods ended September 30:
2020	$	2,931,312		$	41,377		$	2,972,689
2021	2,065,429			38,263			2,103,692
2022	1,322,596			37,640			1,360,236
2023	288,135			36,696			324,831
2024	135,600			20,818			156,418
Thereafter	237,300			4,943			242,243
Total lease payments	6,980,372			179,737			7,160,109
Less amount of lease payments representing interest	(404,268		)	(19,996		)	(424,264		)
Total present value of lease payments	$	6,576,104		$	159,741		$	6,735,845

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Subsequent Event

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

The Company evaluated all of its activities and concluded that no subsequent events have occurred that would require recognition in its financial statements or disclosed in the notes to its financial statements.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

The Company’s inventories consist of the following at September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018
Finished goods	$	26,736,079	$	21,283,354
Raw materials	25,531,163		15,206,526
Supplies & miscellaneous	310,312		226,134
Totals	$	52,577,554	$	36,716,014

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Operating Leases - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Lessee, Lease, Description [Line Items]
Operating lease expense	$ 766,022	$ 787,306	$ 2,302,012	$ 2,369,318
Operating lease, required monthly payments			$ 3,912
Railcars | Minimum
Lessee, Lease, Description [Line Items]
Operating lease term	3 years		3 years
Railcars | Maximum
Lessee, Lease, Description [Line Items]
Operating lease term	18 days		18 days
Machinery and equipment
Lessee, Lease, Description [Line Items]
Operating lease expense	$ 21,081	$ 9,540	$ 41,723	$ 34,118
Machinery and equipment | Minimum
Lessee, Lease, Description [Line Items]
Operating lease term	3 days		3 days
Machinery and equipment | Maximum
Lessee, Lease, Description [Line Items]
Operating lease term	7 days		7 days

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Note Payable - Seasonal Loan (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Line of Credit Facility [Line Items]
Line of credit facility, expiration date	Dec. 01, 2019
Advances outstanding	$ 16,000,000	$ 0
Seasonal Loan
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	$ 20,000,000
Interest rate	4.22%
Commitment fee percentage	0.20%
Advances outstanding	$ 3,738,236	$ 0
Remaining available funds to borrow	$ 16,300,000

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Member Distribution (Details Textual) - USD ($) $ / shares in Units, $ in Millions		9 Months Ended
	Feb. 07, 2019	Sep. 30, 2019
Member Distribution [Abstract]
Declaration date		Feb. 05, 2019
Cash distributions paid	$ 15.2
Distributions paid, per unit (USD per share)	$ 0.500
Distribution date		Feb. 07, 2019

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Derivative Instruments and Hedging Activities (Details Textual) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative assets (liabilities), at fair value, net	$ 484,832	$ 802,770

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Related Party Transactions (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Prairie AquaTech, LLC
Related Party Transaction [Line Items]
Revenue from related parties	$ 648,215	$ 152,838	$ 942,195	$ 233,233
Due from related parties	90,414		90,414		$ 18,540
Prairie Aqua Tech Manufacturing, LLC
Related Party Transaction [Line Items]
Due from related parties, cumulative, current	1,720,000		1,720,000
Due from related parties, current	178,611		178,611		$ 777,342
Management Services | Prairie Aqua Tech Manufacturing, LLC
Related Party Transaction [Line Items]
Revenue from related parties	$ 100,834	$ 27,693	$ 666,431	$ 55,385

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Accounts Receivable (Details Textual)	9 Months Ended
	Sep. 30, 2019
Receivables [Abstract]
Percentage of late fee on past due receivables	1.50%

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Principal Activity and Significant Accounting Policies - Additional Information (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred revenue	$ 140,396	$ 140,396		$ 15,042
Contract with customer, revenue recognized	0	15,042
Long-term liabilities	15,908,909	15,908,909		5,796,382
Present value of remaining lease payments	7,160,109	7,160,109
Right-of-use asset	$ 6,735,845	$ 6,735,845		$ 7,918,283
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Long-term liabilities			$ 10,300,000
Present value of remaining lease payments			11,000,000
Right-of-use asset			$ 10,300,000

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Investments in Related Parties (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Schedule of Equity Method Investments [Line Items]
Loss on equity method investment			$ 135,588	$ 61,996
Prairie AquaTech, LLC
Schedule of Equity Method Investments [Line Items]
Loss on equity method investment	$ (36,099)	$ 91,781	$ (135,588)	$ (61,996)

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Note Payable - Seasonal Loan

9 Months Ended

Sep. 30, 2019

Notes Payable Seasonal Loan [Abstract]

Note Payable - Seasonal Loan

Note Payable – Seasonal Loan

The Company has entered into a revolving credit agreement with CoBank which expires December 1, 2019. The purpose of the credit agreement is to finance the operating needs of the Company. Under this agreement, the Company may borrow up to $20 million, and advances on the revolving credit agreement are secured. Interest accrues at a variable rate (4.22% at September 30, 2019). The Company pays a 0.20% annual commitment fee on any funds not borrowed. There were advances outstanding of $3,738,236 and $0 at September 30, 2019 and December 31, 2018, respectively. The remaining available funds to borrow under the terms of the revolving credit agreement were $16.3 million as of September 30, 2019.

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Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

In the ordinary course of business, the Company enters into contractual arrangements as a means of managing exposure to changes in commodity prices and, occasionally, foreign exchange and interest rates. The Company’s derivative instruments primarily consist of commodity futures, options and forward contracts, and interest rate swaps, caps and floors. Although these contracts may be effective economic hedges of specified risks, they are not designated as, nor accounted for, as hedging instruments. These contracts are recorded on the Company’s condensed balance sheets at fair value as discussed in Note 11, Fair Value.

As of September 30, 2019 and December 31, 2018, the value of the Company’s open futures, options and forward contracts was approximately $484,832 and $802,770, respectively.

		As of September 30, 2019
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets	$	3,633,222	$	2,707,719
Foreign exchange contracts	Current Assets	16,457		8,509
Interest rate caps and floors	Current Liabilities	—		448,619
Totals		$	3,649,679	$	3,164,847

		As of December 31, 2018
	Balance Sheet Classification	Asset Derivatives		Liability Derivatives
Derivatives not designated as hedging instruments:
Commodity contracts	Current Assets	$	3,696,540	$	2,722,830
Foreign exchange contracts	Current Assets	129,258		100,730
Interest rate caps and floors	Current Liabilities	—		199,468
Totals		$	3,825,798	$	3,023,028

During the three and nine-month periods ended September 30, 2019 and 2018, net realized and unrealized gains (losses) on derivative transactions were recognized in the condensed statements of operations as follows:

	Net Gain (Loss) Recognized  on Derivative Activities for the					Net Gain (Loss) Recognized  on Derivative Activities for the
	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
Derivatives not designated as hedging instruments:
Commodity contracts	$	2,188,931		$	4,607,791	$	3,197,752		$	2,801,898
Foreign exchange contracts	(10,091		)	46,342		34,738			6,158
Interest rate swaps, caps and floors	(92,998		)	40,008		(248,547		)	251,932
Totals	$	2,085,842		$	4,694,141	$	2,983,943		$	3,059,988

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Condensed Statement of Changes in Members' Equity Statement - USD ($)	Total	Capital Unit, Class A
Beginning Balances (in shares) at Dec. 31, 2017		30,419,000
Ending Balances (in shares) at Sep. 30, 2018		30,419,000
Beginning Balances at Dec. 31, 2017		$ 69,375,206
Net income (loss)	$ 14,705,935	14,705,935
Distribution to members	(5,075,303)
Ending Balances at Sep. 30, 2018		$ 79,005,838
Beginning Balances (in shares) at Dec. 31, 2018		30,419,000
Ending Balances (in shares) at Sep. 30, 2019		30,419,000
Beginning Balances at Dec. 31, 2018		$ 90,177,248
Net income (loss)	12,186,204	12,186,204
Distribution to members	$ (15,209,500)
Ending Balances at Sep. 30, 2019		$ 87,153,952

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Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 239,121	$ 7,197,082
Trade accounts receivable	17,959,870	20,550,438
Inventories	52,577,554	36,716,014
Margin deposits	2,764,721	2,350,852
Prepaid expenses	719,047	1,492,163
Total current assets	74,260,313	68,306,549
Property and equipment	115,116,127	110,314,779
Less accumulated depreciation	(54,325,980)	(51,246,765)
Total property and equipment, net	60,790,147	59,068,014
Other assets
Investments in related parties	7,873,727	8,009,315
Investments in cooperatives	1,562,098	1,552,022
Right-of-use lease asset, net	6,735,845	7,918,283
Total other assets	16,171,670	17,479,620
Total assets	151,222,130	144,854,183
Liabilities and Members' Equity
Excess of outstanding checks over bank balance	5,192,413	3,893,179
Current maturities of long-term debt	4,603,342	61,964
Note payable - seasonal loan	3,738,236	0
Current operating lease liabilities	2,818,321	2,714,928
Accounts payable	2,148,992	2,325,404
Accrued commodity purchases	26,093,911	35,384,390
Accrued expenses	3,182,372	3,697,631
Accrued interest	62,675	10,673
Deferred liabilities - current	319,007	792,384
Total current liabilities	48,159,269	48,880,553
Long-term liabilities
Long-term debt, net of current maturities and unamortized debt issuance costs	11,991,385	593,027
Long-term operating lease liabilities	3,917,524	5,203,355
Total long-term liabilities	15,908,909	5,796,382
Commitments and contingencies (Notes 6, 7, 8, and 13)
Members' equity
Total liabilities and members' equity	151,222,130	144,854,183
Capital Unit, Class A
Members' equity
Class A Units, no par value, 30,419,000 units issued and outstanding at September 30, 2019 and December 31, 2018	$ 87,153,952	$ 90,177,248