Risk Management

9 Months Ended

Jun. 30, 2012

Risk Management [Abstract]

Derivative Instruments and Hedging Activities Disclosure

Risk Management

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

The Company maintains a risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by market fluctuations.  The Company's specific goal is to protect the Company from large moves in the commodity costs.

To reduce price risk caused by market fluctuations, the Company generally follows a policy of using exchange-traded futures and options contracts to minimize its net position of merchandisable agricultural commodity inventories and forward purchases and sales contracts.  Exchange traded futures and options contracts are designated as non-hedge derivatives and are valued at market price with changes in market price recorded in operating income through cost of goods sold for corn derivatives and through revenue for ethanol derivatives.

The effects on operating income from derivative activities is as follows:

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Increase (decrease) in revenue due to derivatives related to ethanol sales:
Realized	$	(7,308	)	$	(288,507	)	$	(7,308	)	$	(953,648	)
Unrealized	36,842			539,847			—			262,500
Total effect on revenue	29,534			251,340			(7,308		)	(691,148		)
(Increase) decrease in cost of goods sold due to derivatives related to corn costs:
Realized	1,710,975			(1,149,338		)	1,955,188			(3,062,963		)
Unrealized	(1,849,313		)	(1,343,663		)	(1,782,463		)	(313,250		)
Total effect on cost of goods sold	(138,338		)	(2,493,001		)	172,725			(3,376,213		)
Total increase (decrease) to operating income due to derivative activities	$	(108,804	)	$	(2,241,661	)	$	165,417		$	(4,067,361	)

Unrealized gains and losses on forward contracts, in which delivery has not occurred, are deemed “normal purchases and normal sales”, and therefore are not marked to market in the Company's financial statements but are subject to a lower of cost or market assessment.