Company: REX
Filing Date: 2025-06-04
Form Type: 10-Q
Source: 0000930413-25-001941
Chunk: 98

Company: REX AMERICAN RESOURCES Corp
Filing Date: 2025-06-04
Form: 10-Q
Item: Part I, Item 2
Chunk 98
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d ethanol produced per bushel of corn processed as the realized yield. We refer to the difference between the
price per gallon of ethanol and the price per bushel of corn (divided by the realized yield) as the “crush spread”.
Should the crush spread decline, it is possible that our ethanol plants will generate operating results that do not provide adequate
cash flows for sustained periods of time. In such cases, production at the ethanol plants may be reduced or stopped altogether
in order to minimize variable costs at individual plants.

We attempt to manage the risk related to
the volatility of commodity prices by utilizing forward corn and natural gas purchase contracts, forward ethanol, distillers grains
and distillers corn oil sale contracts, and commodity futures agreements, as management deems appropriate. We attempt to match
quantities of these sales contracts with an appropriate quantity of corn purchase contracts over a given period of time when we
can obtain an adequate gross margin resulting from the crush spread inherent in the contracts we have executed. However, the market
for future ethanol sales contracts generally lags the spot

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market with respect to ethanol prices. Consequently, we generally
execute fixed price contracts for no more than four months into the future at any given time and we may lock in our corn or ethanol
price without having a corresponding locked in ethanol or corn price for short durations of time. As a result of the relatively
short period of time our fixed price contracts cover, we generally cannot predict the future movements in our realized crush spread
for more than four months; thus, we are unable to predict the likelihood or amounts of future income or loss from the operations
of our ethanol facilities.

One Earth Energy, LLC Carbon Sequestration and Plant Expansion

One Earth Sequestration, LLC, a wholly
owned subsidiary of One Earth Energy, LLC, is in the developmental stage of a carbon sequestration project near the One Earth
ethanol plant. In October 2022, we applied for a Class VI injection well permit for three wells with the EPA, and we continue
to provide information to the EPA upon request during the technical review of our application. We currently expect the EPA to
prepare a draft permit by November 2025 and make a final permit decision by April 2026, according to the EPA’s Class VI
Permit Tracker Dashboard on their website. We also need to obtain a county special-use zoning permit for the sequestration site.
We have completed the construction of the capture and compression facility to