Commitments and Contingencies

3 Months Ended

Jan. 31, 2016

Commitments and Contingencies [Abstract]

Commitments and Contingencies

9.   COMMITMENTS AND CONTINGENCIES

Corn Storage and Grain Handling Agreement and Purchase Commitments

GFE has a corn storage and grain handling agreement with Farmers Cooperative Elevator Company (FCE), a member. Under the current agreement, the Company agrees to purchase all of the corn needed for the operation of the plant from FCE. The price of the corn purchased will be the bid price the member establishes for the plant plus a set fee per bushel.

On January 31, 2016, GFE had 380,000 bushels of stored corn totaling approximately $1,300,000 with FCE.  At January 31, 2016, GFE had no forward corn purchase commitments.

On January 31, 2016, HLBE had cash and basis contracts for forward corn purchase commitments for approximately 4,597,000 bushels for deliveries through December 2016.

Ethanol Contracts

At January 31, 2016, GFE had forward contracts to sell approximately $2,166,000 of ethanol for various delivery periods from February 2016 through March 2016 which approximates 15% of its anticipated ethanol sales during that period.

At January 31, 2016, HLBE had forward contracts to sell approximately $2,100,000 of ethanol for various delivery periods from February 2016 through March 2016 which approximates 15% of its anticipated ethanol sales during that period.

Distillers' Grain Contracts

At January 31, 2016, GFE had forward contracts to sell approximately $666,000 of distillers' grain for deliveries in February 2016 which approximates 43% of its anticipated distillers' grain sales during that period.

At January 31, 2016, HLBE had forward contracts to sell approximately $95,000 of distillers' grains for delivery in February 2016 which approximates 6% of its anticipated distillers' grain sales during that period.

Natural Gas

At January 31, 2016, GFE had forward basis contracts to buy natural gas for deliveries in February 2016 through March 2016, which approximates 75% of its anticipated natural gas purchases during this period.

At January 31, 2016, HLBE had no forward contracts to buy natural gas.

Corn Oil

At January 31, 2016, GFE had forward contracts to sell approximately $217,000 of corn oil for delivery through March 2016.

At January 31, 2016, HLBE had forward contracts to sell approximately $391,000 of corn oil for delivery through May 2016.

Construction in Progress

On April 8, 2015, GFE executed a construction agreement with an unrelated contractor to construct an additional 750,000 bushel grain storage bin.  The grain storage expansion project is expected to cost approximately $2.7 million and is expected to be completed during the first half of our 2016 fiscal year.

On July 31, 2015, HLBE placed a purchase order with an unrelated party for a new regenerative thermal oxidizer and made a down payment of approximately $375,000 to secure the order.  The total commitment approximates $1.9 million and is expected to be completed during the latter part of fiscal year 2016.