(4) Financial Instruments

In January 2015, the Company purchased 175 corn call option commodity derivatives with a total notional amount of approximately $0.3 million. These purchases were in accordance with Company policy to mitigate the market price risk associated with the anticipated raw material purchase requirements, specifically future corn purchases expected to be made by the Company. The Company accounts for commodity derivatives as non-hedging derivatives because they have not been designated as hedging instruments. In addition to the 32 corn options sold during fiscal 2015, the Company sold 99 corn call option commodity derivatives during the first quarter of fiscal 2016 which resulted in an immaterial loss. As of October 31, 2015, the Company had 44 corn call option commodity derivatives outstanding. Commodity derivative gains and losses were not material to the Consolidated Statements of Operations for the three months ended October 31, 2015 and 2014.

The fair values of the Company’s derivative instruments were as follows:



Liability Derivatives	Balance Sheet Location	Fair Value
		October 31, 2015		July 31, 2015		October 31, 2014
Derivatives not designated as hedging instruments:
Commodity contracts	Prepaid and other current assets	$	4	$	117	$	1
Total		$	4	$	117	$	1

ASC 820 requires that assets and liabilities carried at fair value be measured using the following three levels of inputs:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company values the commodity derivatives using Level 2 inputs. The value of the commodity contracts is calculated utilizing the number of contracts, as measured in bushels, multiplied by the price of corn per bushel obtained from the Chicago Mercantile Exchange.

Assets and Liabilities Disclosed at Fair Value

The fair value of certain financial instruments, including cash and cash equivalents, trade receivables, accounts payable and accrued liabilities approximate the amounts recorded in the balance sheet because of the relatively short term nature of these financial instruments. The fair value of notes payable and long-term obligations at the end of each fiscal period approximates the amounts recorded in the balance sheet based on information available to the Company with respect to current interest rates and terms for similar financial instruments, except for the 7.000% Senior Notes (the "Notes") issued during the third quarter of fiscal 2014. The Company measured the $230.0 million Notes based on Level 3 inputs, and determined the fair value was $240.2 million as of October 31, 2015 and $238.4 million as of July 31, 2015. The fair value of the Notes was not materially different than the carrying value as of October 31, 2015. The fair value was estimated using a discounted cash flow methodology with unobservable inputs including the market yield and redemption rate. The discounted cash flow used a risk adjusted yield to present value the contractual cash flows. Refer to Note 10 to the Consolidated Financial Statements for further discussion on the Notes.