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Item 3. Quantitative and Qualitative Disclosures About Market Risk

2025-11-07 compared with 2025-08-08 · 48 added, 52 removed, 9 unchanged (92% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to various market

risks, including changes in commodity prices, as discussed below.

Market risk is the potential loss arising from adverse changes in market

rates and prices.

are exposed to various market risks, including changes in commodity prices, as discussed below.

Market risk is the potential loss arising

from adverse changes in market rates and prices.

In the ordinary course of business, we may enter into various types of transactions

involving financial instruments to manage and reduce the impact of changes in commodity prices.

We do not have material exposure to interest

We do not expect to have any exposure to foreign currency risk as we conduct all of our transactions in U.S.

produce and distribute specialty alcohol, fuel-grade ethanol and essential ingredients.

Our business is sensitive to changes in the prices

of ethanol and corn.

In the ordinary course of business, we may enter into various types of transactions involving financial instruments

to manage and reduce the impact of changes in commodity prices.

We do not have material exposure to interest rate risk.

We do not expect

to have any exposure to foreign currency risk as we conduct all of our transactions in U.S.

We produce and distribute specialty

alcohol, fuel-grade ethanol and essential ingredients.

Our business is sensitive to changes in the prices of ethanol and corn.

ordinary course of business, we may enter into various types of transactions involving financial instruments to manage and reduce the

impact of changes in ethanol and corn prices.

We do not enter into derivatives or other financial instruments for trading or speculative

We are subject to market risk

with respect to ethanol and corn pricing.

to manage and reduce the impact of changes in ethanol and corn prices.

We do not enter into derivatives or other financial instruments

for trading or speculative purposes.

are subject to market risk with respect to ethanol and corn pricing.

Ethanol prices are sensitive to global and domestic ethanol supply;

3 unchanged sentences

government regulation;

and consumer demand for alternative fuels.

Our ethanol sales are

priced using contracts that are either based on a fixed price or an indexed price tied to a specific market, such as Chicago Ethanol

(Platts) or the Oil Price Information Service.

Under these fixed-priced arrangements, we are exposed to risk of a decrease in the market

price of ethanol between the time the price is fixed and the time the alcohol is sold.

We satisfy our physical corn

needs, the principal raw material used to produce alcohol and essential ingredients, based on purchases from our corn vendors.

we determine the purchase price of our corn at or near the time we begin to grind.

Additionally, we also enter into volume contracts

with our vendors to fix the purchase price.

As such, we are also subject to market risk with respect to the price of corn.

of corn is subject to wide fluctuations due to unpredictable factors such as weather conditions, farmer planting decisions, governmental

policies with respect to agriculture and international trade and global supply and demand.

Under the fixed price arrangements, we assume

the risk of a decrease in the market price of corn between the time the price is fixed and the time the corn is utilized.

Essential ingredients are sensitive

to various demand factors such as numbers of livestock on feed, prices for feed alternatives and supply factors, primarily production

of ethanol co-products by ethanol plants and other sources.

As noted above, we may attempt

to reduce the market risk associated with fluctuations in the price of ethanol or corn by employing a variety of risk management and

hedging strategies.

Strategies include the use of derivative financial instruments such as futures and options executed on the Chicago

Mercantile Exchange or the New York Mercantile Exchange, as well as the daily management of physical corn.

These derivatives are not designated for special

hedge accounting treatment, and as such, the changes in the fair values of these contracts are recorded on the balance sheet and recognized

immediately in cost of goods sold.

We recognized net gains of $4.4 million and $11.6 million related to the changes in the fair values

of these contracts for the six months ended June 30, 2025 and 2024, respectively.

We prepared a sensitivity analysis

as of June 30, 2025 to estimate our exposure to ethanol and corn.

Market risk related to these factors was estimated as the potential

change in pre-tax income resulting from a hypothetical 10% adverse change in the prices of our expected ethanol and corn volumes.

analysis uses average Chicago Mercantile Exchange prices for the year and does not factor in future contracted volumes.

The results of

this analysis for the six months ended June 30, 2025, which may differ materially from actual results, are as follows (in millions):

and consumer demand for alternative

Our ethanol sales are priced using contracts that are either based on a fixed price or an indexed price tied to a specific market,

such as Chicago Ethanol (Platts) or the Oil Price Information Service.

Under these fixed-priced arrangements, we are exposed to risk

of a decrease in the market price of ethanol between the time the price is fixed and the time the alcohol is sold.

satisfy our physical corn needs, the principal raw material used to produce alcohol and essential ingredients, based on purchases from

our corn vendors.

Generally, we determine the purchase price of our corn at or near the time we begin to grind.

Additionally, we also

enter into volume contracts with our vendors to fix the purchase price.

As such, we are also subject to market risk with respect to the

price of corn.

The price of corn is subject to wide fluctuations due to unpredictable factors such as weather conditions, farmer planting

decisions, governmental policies with respect to agriculture and international trade and global supply and demand.

Under the fixed price

arrangements, we assume the risk of a decrease in the market price of corn between the time the price is fixed and the time the corn

ingredients are sensitive to various demand factors such as numbers of livestock on feed, prices for feed alternatives and supply factors,

primarily production of ethanol co-products by ethanol plants and other sources.

noted above, we may attempt to reduce the market risk associated with fluctuations in the price of ethanol or corn by employing a variety

of risk management and hedging strategies.

Strategies include the use of derivative financial instruments such as futures and options

executed on the Chicago Mercantile Exchange or the New York Mercantile Exchange, as well as the daily management of physical corn.

These derivatives

are not designated for special hedge accounting treatment, and as such, the changes in the fair values of these contracts are recorded

on the balance sheet and recognized immediately in cost of goods sold.

We recognized net gains of $10.2 million and $9.0 million related

to the changes in the fair values of these contracts for the nine months ended September 30, 2025 and 2024, respectively.

prepared a sensitivity analysis as of September 30, 2025 to estimate our exposure to ethanol and corn.

Market risk related to these factors

was estimated as the potential change in pre-tax income resulting from a hypothetical 10% adverse change in the prices of our expected

ethanol and corn volumes.

The analysis uses average Chicago Mercantile Exchange prices for the year and does not factor in future contracted

The results of this analysis for the nine months ended September 30, 2025, which may differ materially from actual results,

are as follows (in millions):

Unit of Measure

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk