6. DERIVATIVE INSTRUMENTS

The Company enters into corn, ethanol, and natural gas derivatives in order to protect cash flows from fluctuations caused by volatility in commodity prices for periods up to 24 months. These derivatives are put in place to protect gross profit margins from potentially adverse effects of market and price volatility on ethanol sales and corn purchase commitments where the prices are set at a future date. Although these derivative instruments serve the Company’s purpose as an economic hedge, they are not designated as effective hedges for accounting purposes. For derivative instruments that are not accounted for as hedges, or for the ineffective portions of qualifying hedges, the change in fair value is recorded through earnings in the period of change

As of October 31, 2017, the total notional amount of GFE’s outstanding corn derivative instruments was approximately 1,495,000 bushels, comprised of long corn positions on 200,000 bushels that were entered into to hedge forecasted ethanol sales through December 2017, and short corn positions on 1,295,000 bushels that were entered into to hedge forecasted corn purchases through December 2018. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding.

As of October 31, 2017, the total notional amount of GFE’s outstanding ethanol derivative instruments was approximately 420,000 gallons that were entered into to hedge forecasted ethanol sales through November 2017.

As of October 31, 2017, GFE had approximately $75,000 cash collateral (restricted cash) and approximately $12,000 due to broker related to derivatives held by a broker.

As of October 31, 2017, the total notional amount of HLBE’s outstanding corn derivative instruments was approximately 1,120,000 bushels, comprised of long corn positions on 215,000 bushels that were entered into to hedge forecasted ethanol sales through December 2017, and short corn positions on 905,000 bushels that were entered into to hedge forecasted corn purchases through July 2018. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding.

As of October 31, 2017, HLBE had outstanding natural gas derivative instruments totaling 120,000 MMBTU entered into hedge forecasted natural gas purchases through February 2018.

As of October 31, 2017, the total notional amount of HLBE’s outstanding ethanol derivative instruments was approximately 420,000 gallons that were entered into to hedge forecasted ethanol sales through November 2017

As of October 31, 2017, HLBE did not have any cash collateral (restricted cash) and approximately $12,000 due to broker related to derivatives held by a broker.

The following tables provide details regarding the Company’s derivative instruments at October 31, 2017, none of which were designated as hedging instruments:


	Consolidated Balance Sheet location	Assets		Liabilities
Corn contracts - GFE	Commodity derivative instruments	$	102,650	$	—
Corn contracts - HLBE	Commodity derivative instruments		141,644		—
Ethanol contracts - GFE	Commodity derivative instruments		—		12,749
Ethanol contracts - HLBE	Commodity derivative instruments		—		12,249
Natural gas contracts - HLBE	Commodity derivative instruments		—		15,381
Totals		$	244,294	$	40,379

As of October 31, 2016, the total notional amount of GFE’s outstanding corn derivative instruments was approximately 5,220,000 bushels, comprised of long corn positions on 3,300,000 bushels that were entered into to hedge forecasted ethanol sales through March 2017, and short corn positions on 1,920,000 bushels that were entered into to hedge forecasted corn purchases through December 2016. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2016, GFE did not have any cash collateral (restricted cash) related to derivatives held by a broker.

As of October 31, 2016, the total notional amount of HLBE’s outstanding corn derivative instruments was approximately 4,285,000 bushels, comprised of long corn positions on 3,100,000 bushels that were entered into to hedge forecasted ethanol sales through March 2017, and short corn positions on 1,185,000 bushels that were entered into to hedge forecasted corn purchases through August 2017. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2016, HLBE did not have any cash collateral (restricted cash) related to derivatives held by a broker.

The following tables provide details regarding the Company’s derivative instruments at October 31, 2016, none of which were designated as hedging instruments:


	Consolidated Balance Sheet location	Assets		Liabilities
Corn contracts - GFE	Commodity derivative instruments	$	63,050	$	—
Corn contracts - HLBE	Commodity derivative instruments		388,525		—
Ethanol Contracts - GFE	Commodity derivative instruments		503,538		—
Ethanol Contracts - HLBE	Commodity derivative instruments		273,813		—
Totals		$	1,228,926	$	—

The following tables provide details regarding the gains (losses) from Company’s derivative instruments in statements of operations, none of which are designated as hedging instruments:


	Consolidated Statement	Year Ended October 31,
	of Operations Location	2017		2016		2015
Corn contracts	Cost of Goods Sold	$	1,129,746	$	708,364	$	303,925
Ethanol contracts	Revenues		(414,829)		(159,322)		—
Natural gas contracts	Cost of Goods Sold		(15,381)		32,358		—
Total gain, net		$	699,536	$	581,400	$	303,925