Heron Lake BioEnergy (HLBYL) 10-Q 14 Sep 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Jul. 31, 2018	Sep. 14, 2018
Entity Registrant Name	Heron Lake BioEnergy, LLC
Entity Central Index Key	1,286,964
Current Fiscal Year End Date	--10-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jul. 31, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus (Q1,Q2,Q3,FY)	Q3
Amendment Flag	false
Entity Current Reporting Status	Yes
Class A units
Common stock, shares outstanding		62,932,107
Class B units
Common stock, shares outstanding		15,000,000

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Jul. 31, 2018	Oct. 31, 2017
Current Assets
Cash	$ 5,605,354	$ 10,065,367
Restricted cash	23,620
Accounts receivable	1,716,192	4,031,977
Inventory	6,516,264	7,064,344
Commodity derivative instruments	286,601	141,644
Prepaid expenses and other current assets	445,668	259,106
Total current assets	14,593,699	21,562,438
Property and Equipment, net	45,081,316	46,567,087
Other Assets
Other intangible assets, net	17,241	45,852
Other assets	697,254	697,254
Total other assets	714,495	743,106
Total Assets	60,389,510	68,872,631
Current Liabilities
Current maturities of long-term debt	322,048	432,183
Accounts payable	2,663,097	4,771,197
Commodity derivative instruments	35,196	27,630
Accrued expenses	290,146	415,106
Total current liabilities	3,310,487	5,646,116
Long-Term Debt, less current portion	795,555	965,502
Commitments and Contingencies
Members' Equity
Members' equity attributable to Heron Lake BioEnergy, LLC consists of 77,932,107 units issued and outstanding at both July 31, 2018 and October 31, 2017	54,635,331	60,767,951
Non-controlling interest	1,648,137	1,493,062
Total members' equity	56,283,468	62,261,013
Total Liabilities and Members' Equity	$ 60,389,510	$ 68,872,631

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - shares	Jul. 31, 2018	Oct. 31, 2017
Statement of Financial Position [Abstract]
Members' Equity, units authorized	77,932,107	77,932,107
Members' Equity, units issued	77,932,107	77,932,107
Members' Equity, units outstanding	77,932,107	77,932,107

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2018	Jul. 31, 2017
Income Statement [Abstract]
Revenues	$ 26,252,916	$ 28,541,889	$ 84,106,223	$ 81,922,747
Cost of Goods Sold	25,160,502	26,290,595	79,304,820	74,406,956
Gross Profit	1,092,414	2,251,294	4,801,403	7,515,791
Operating Expenses	(719,371)	(732,406)	(2,426,398)	(2,348,775)
Operating Income	373,043	1,518,888	2,375,005	5,167,016
Other Income (Expense):
Interest income	17,721	7,692	48,743	9,900
Interest expense	(53,190)	(79,022)	(81,556)	(136,212)
Other income, net	360	391	329,584	398,906
Total other income (expense), net	(35,109)	(70,939)	296,771	272,594
Net Income	337,934	1,447,949	2,671,776	5,439,610
Less: Net Income Attributable to Non-controlling Interest	(35,248)	(33,197)	(236,075)	(173,325)
Net Income Attributable to Heron Lake BioEnergy, LLC	$ 302,686	$ 1,414,752	$ 2,435,701	$ 5,266,285
Weighted Average Units Outstanding—Basic and Diluted (Class A and B) (in units)	77,932,107	77,932,107	77,932,107	77,932,107
Net Income Per Unit Attributable to Heron Lake BioEnergy, LLC—Basic and Diluted (Class A and B) (in dollars per unit)	$ 0	$ 0.02	$ 0.03	$ 0.07
Distributions Per Unit (Class A and B) (in dollars per unit)	$ 0	$ 0	$ 0.11	$ 0

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Jul. 31, 2018	Jul. 31, 2017
Cash Flow From Operating Activities:
Net income	$ 2,671,776	$ 5,439,610
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	3,731,782	3,741,698
Gain on sale of asset	(24,815)	(45,000)
Change in fair value of commodity derivative instruments	(477,288)	(407,603)
Changes in operating assets and liabilities:
Restricted cash	(23,620)	(144,345)
Accounts receivable	2,315,785	2,857,378
Inventory	548,080	(583,522)
Commodity derivative instruments	339,897	914,550
Prepaid expenses and other current assets	(186,562)	(217,755)
Accounts payable	(3,042,596)	(1,916,193)
Accrued expenses	(124,960)	(104,048)
Net cash provided by operating activities	5,727,479	9,534,770
Cash Flows from Investing Activities:
Capital expenditures	(1,282,904)	(967,937)
Proceeds from disposal of asset	24,815	45,000
Net cash used in investing activities	(1,258,089)	(922,937)
Cash Flows from Financing Activities:
Payments on checks drawn in excess of bank balance		(1,866,683)
Payments on long-term debt	(280,082)	(324,994)
Distributions to Heron Lake BioEnergy, LLC members	(8,568,321)
Distribution to non-controlling interest	(81,000)
Net cash used in financing activities	(8,929,403)	(2,191,677)
Net increase (decrease) in cash	(4,460,013)	6,420,156
Cash - Beginning of period	10,065,367	1,297,644
Cash - End of period	5,605,354	7,717,800
Supplemental Disclosure of Cash Flow Information
Interest expense	81,556	136,212
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Capital expenditures included in accounts payable	$ 934,496	$ 45,328

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Jul. 31, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. Nature of Business Heron Lake BioEnergy, LLC’s wholly owned subsidiary, HLBE Pipeline Company, LLC (“HLBE Pipeline Company”), owns 73% of Agrinatural Gas, LLC (“Agrinatural”). Agrinatural operates a natural gas pipeline that provides natural gas to Heron Lake BioEnergy, LLC 's ethanol production facility and other customers. Basis of Presentation and Principles of Consolidation The condensed consolidated unaudited financial statements as of July 31, 2018 include the accounts of Heron Lake BioEnergy, LLC and its wholly owned subsidiary, HLBE Pipeline Company (collectively the “Company”). Given the Company’s control over the operations of Agrinatural and its majority voting interest, the Company consolidates the unaudited financial statements of Agrinatural with its consolidated unaudited financial statements, with the equity and earnings (loss) attributed to the remaining 27% non-controlling interest identified separately in the accompanying condensed consolidated balance sheets and statements of operations. All significant intercompany balances and transactions are eliminated in consolidation. The condensed consolidated unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. These condensed consolidated unaudited financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company’s audited consolidated financial statements for the year ended October 31, 2017, contained in the Company’s annual report on Form 10-K. In the opinion of management, the condensed consolidated unaudited financial statements reflect all adjustments consisting of normal recurring accruals that we consider necessary to present fairly the Company’s results of operations, financial position, and cash flows. The results reported in these condensed consolidated unaudited financial statements should not be regarded as necessarily indicative of results that may be expected for any other fiscal period or for the fiscal year. Accounting Estimates Management uses estimates and assumptions in preparing these condensed consolidated unaudited financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for significant matters including, among others, the economic lives of property and equipment, the analysis of impairment of long-lived assets, valuation of commodity derivative instruments, inventory, inventory purchase and sales commitments, and evaluation of railcar damages contingency. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. Actual results could differ from those estimates. Non-controlling Interest Amounts recorded as non-controlling interest on the balance sheets relate to the net investment by an unrelated party in Agrinatural. Income and losses are allocated to the members of Agrinatural based on their respective percentage of membership units held. Pursuant to the firm natural gas transportation agreement , Agrinatural will provide natural gas to the plant with a specified price per MMBTU for a term ending on October 31, 2021, with one automatic renewal option to extend the term for an additional five years. Revenue Recognition The Company generally sells ethanol and related products pursuant to marketing agreements. Revenues from the production of ethanol and the related products are recorded when the customer has taken title and assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. Title is generally assumed by the buyer at the Company’s shipping point. In accordance with the Company's agreements for the marketing and sale of ethanol and related products, marketing fees and commissions due to the marketers are deducted from the gross sales price as earned. These fees and commissions are recorded net of revenues as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products. Shipping costs incurred by the Company in the sale of ethanol are not specifically identifiable and as a result, are recorded based on the net selling price reported to the Company from the marketer. Shipping costs incurred by the Company in the sale of ethanol related products are included in cost of goods sold. Agrinatural recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, or services have been rendered, the fee for the arrangement is fixed or determinable and collectability is reasonably assured. Inventory Inventory is stated at the lower of cost or net realizable value. Cost for all inventories is determined using the first in first out method (FIFO). Net realizable value is the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and spare parts. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers’ grains, and corn oil. Derivative Instruments From time to time the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives on the balance sheets at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings. Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our condensed consolidated unaudited financial statements. In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company's ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes. The Company has adopted authoritative guidance related to “Derivatives and Hedging”, and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. See further discussion in Note 4. Reportable Operating Segments Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, establishes the standards for reporting information about segments in financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the related business nature and expected financial results criteria set forth in ASC 280, the Company has two reportable operating segments for financial reporting purposes. · Ethanol Production . Based on the nature of the products and production process and the expected financial results, the Company’s operations at its ethanol plant, including the production and sale of ethanol and its co-products, are aggregated into one financial reporting segment. · Natural Gas Pipeline . The Company has majority ownership in Agrinatural, through its wholly owned subsidiary, HLBE Pipeline, LLC, and operations of Agrinatural’s natural gas pipeline are aggregated into another financial reporting segment.

RISKS AND UNCERTAINTIES

RISKS AND UNCERTAINTIES	9 Months Ended
	Jul. 31, 2018
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES	2. The Company has certain risks and uncertainties that it experiences during volatile market conditions. These volatilities can have a severe impact on operations. The Company’s revenues are derived from the sale and distribution of ethanol and distillers’ grains to customers primarily located in the U.S. Corn for the production process is supplied to the plant primarily from local agricultural producers. Ethanol sales average 70% to 90% of total revenues and corn costs average 70% to 90% of cost of goods sold. The Company’s operating and financial performance is largely driven by the prices at which it sells ethanol, distillers’ grains, and corn oil and the related costs of corn. The price of ethanol is influenced by factors such as supply and demand, the weather, government policies and programs, unleaded gasoline prices, and the petroleum markets as a whole. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The Company's largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, the weather, government policies and programs, and a risk management program used to protect against the price volatility of these commodities. Market fluctuations in the price of and demand for these commodities may have a significant adverse effect on the Company’s operations, profitability and the availability and adequacy of cash flow to meet the Company’s working capital requirements. The Company's risk management program is used to protect against the price volatility of these commodities.

INVENTORY

INVENTORY	9 Months Ended
	Jul. 31, 2018
INVENTORY
INVENTORY	3. Inventory consisted of the following: July 31, 2018 October 31, 2017 (unaudited) Raw materials $ 1,197,309 $ 1,442,844 Work in process 682,900 652,296 Finished goods 3,439,800 3,747,779 Supplies 1,196,255 1,221,425 Totals $ 6,516,264 $ 7,064,344 The Company performs a lower of cost or net realizable value analysis on inventory to determine if the market values of certain inventories are less than their carrying value, which is attributable primarily to decreases in market prices of corn and ethanol. Based on the lower of cost or net realizable value analysis, the Company recorded a loss on ethanol inventories, as a component of cost of goods sold, of approximately $169,000 and $65,000 for the nine months ended July 31, 2018 and 2017, respectively.

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS	9 Months Ended
	Jul. 31, 2018
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS	4. DERIVATIVE INSTRUMENTS As of July 31, 2018, the total notional amount of the Company’s outstanding corn derivative instruments was approximately 4,125,000 bushels, comprised of short corn positions that were entered into to hedge forecasted corn purchases through December 2019. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of July 31, 2018, the Company had approximately $24,000 of cash collateral (restricted cash) and $0 due to a broker related to derivatives held by a broker, recorded as a component of accounts payable. The following tables provide details regarding the Company’s derivative instruments at July 31, 2018, none of which are designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 286,601 $ 35,196 Totals $ 286,601 $ 35,196 As of October 31, 2017, the total notional amount of the Company's outstanding corn derivative instruments was approximately 1,120,000 bushels, comprised of long corn positions on 215,000 bushels that were entered into to hedge forecasted ethanol sales through December 2017, and short corn positions on 905,000 bushels that were entered into to hedge forecasted corn purchases through July 2018. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2017, the Company had outstanding natural gas derivative instruments totaling 120,000 MMBTU entered into to hedge forecasted natural gas purchases through February 2018. As of October 31, 2017, the total notional amount of the Company’s outstanding ethanol derivative instruments was approximately 420,000 gallons that were entered into to hedge forecasted ethanol sales through November 2017. As of October 31, 2017, the Company had no cash collateral (restricted cash) and approximately $12,000 due to broker related to derivatives held by a broker, recorded as a component of accounts payable. The following tables provide details regarding the Company’s derivative instruments at October 31, 2017, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 141,644 $ — Ethanol contracts Commodity derivative instruments — 12,249 Natural gas contracts Commodity derivative instruments — 15,381 Totals $ 141,644 $ 27,630 The following tables provide detail regarding the gains (losses) from Company’s derivative financial instruments in its condensed consolidated unaudited statements of operations, none of which are designated as hedging instruments: Consolidated Statement of Three Months Ended July 31, Nine Months Ended July 31, Operations Location 2018 2017 2018 2017 Corn contracts Cost of goods sold $ 916,800 $ 233,003 $ 425,139 $ 646,489 Ethanol contracts Revenues (142,625) 31,906 53,747 (238,886) Natural gas contracts Cost of goods sold — — (1,598) — Total gain $ 774,175 $ 264,909 $ 477,288 $ 407,603

FAIR VALUE

FAIR VALUE	9 Months Ended
	Jul. 31, 2018
FAIR VALUE.
FAIR VALUE	5. The following table sets forth, by level, the Company assets and liabilities that were accounted for at fair value on a recurring basis at July 31, 2018: Fair Value Measurement Using Carrying Amount in Quoted Prices Significant Other Significant Consolidated in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative instruments - Corn $ 286,601 $ 286,601 $ 286,601 $ — $ — Financial Liabilities: Commodity Derivative instruments - Corn $ 35,196 $ 35,196 $ — $ 35,196 $ — The following table sets forth, by level, the Company assets and liabilities that were accounted for at fair value on a recurring basis at October 31, 2017: Fair Value Measurement Using Carrying Amount in Quoted Prices in Significant Other Significant Consolidated Active Markets Observable Inputs Unobservable Inputs Financial Assets: Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative instruments - Corn $ 141,644 $ 141,644 $ 141,644 $ — $ — Financial Liabilities: Commodity Derivative instruments - Ethanol $ 12,249 $ 12,249 $ 18,000 $ (5,751) $ — Commodity Derivative instruments - Natural Gas $ 15,381 $ 15,381 $ — $ 15,381 $ — The Company determines the fair value of commodity derivative instruments by obtaining fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the Chicago Board of Trade market and New York Mercantile Exchange. We determine the fair value of ethanol, corn, and natural gas Level 2 instruments by model-based techniques in which all significant inputs are observable in the markets noted above.

DEBT FINANCING

DEBT FINANCING	9 Months Ended
	Jul. 31, 2018
DEBT FINANCING
DEBT FINANCING	6. Long-term debt consists of the following: July 31, 2018 October 31, 2017 (unaudited) Amended revolving term note payable to lending institution, see terms below. $ — $ — Seasonal line of credit payable to lending institution, see terms below. — — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in 2021. The Company made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 1,094,236 1,241,171 Assessment payable as part of water supply agreement, due in monthly installments of $3,942 with interest at 8.73%, enforceable by statutory lien, with the final payment due in 2019. 23,367 56,514 Note payable to non-controlling interest member of Agrinatural. Interest is at One Month LIBOR plus 4.0%, which was approximately 5.24% at October 31, 2017. The note was paid in full in January 2018. — 100,000 Totals 1,117,603 1,397,685 Less amounts due within one year 322,048 432,183 Net long-term debt $ 795,555 $ 965,502 Revolving Term Note The Company had a revolving term note payable under which the Company could borrow, repay, and re-borrow in an amount up to the original aggregate principal commitment at any time prior to maturity at March 1, 2022. The original aggregate principal commitment was $28,000,000, which reduced by $3,500,000 annually, starting March 1, 2015 and continuing each anniversary thereafter until maturity. In December 2017, the Company and its lender orally agreed to reduce the aggregate principal commitment of the revolving term loan to $8,000,000. On April 6, 2018, the Company finalized loan agreements with an effective date of March 29, 2018 for an amended credit facility with its lender. Amended Credit Facility The amended credit facility includes an amended and restated revolving term loan with a $4,000,000 principal commitment and a revolving seasonal line of credit with a $4,000,000 principal commitment. The loans are secured by substantially all of the Company’s assets, including a subsidiary guarantee. The amended credit facility contains customary covenants, including restrictions on the payment of dividends and loans and advances to Agrinatural, and maintenance of certain financial ratios including minimum working capital, minimum net worth and a debt service coverage ratio as defined by the credit facility. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the revolving term loan and/or the imposition of fees, charges, or penalties. As part of the amended credit facility closing, the Company entered into an amended administrative agency agreement with CoBank, ACP (“CoBank”). As a result, CoBank will continue act as the agent for the lender with respect to the amended credit facility. The Company agreed to pay CoBank an annual fee of $2,500 for its services as administrative agent. Amended Revolving Term Note Under the terms of the amended revolving term loan, the Company may borrow, repay, and reborrow up to the aggregate principal commitment amount of $4,000,000. Final payment of amounts borrowed under amended revolving term loan is due December 1, 2021. Interest on the amended revolving term loan accrues at a variable weekly rate equal to 3.10% above the One-Month London Interbank Offered Rate (“LIBOR”) Index rate, which was 5.18% at July 31, 2018 . The Company also agreed to pay an unused commitment fee on the unused available portion of the amended revolving term loan commitment at the rate of 0.500% per annum, payable monthly in arrears. The aggregate principal amount available to the Company for borrowing under the revolving term loan at October 31, 2017 was $17,500,000, and under the amended revolving term loan at July 31, 2018 was $4,000,000. Seasonal Revolving Loan Under the terms of the seasonal revolving loan, the Company may borrow, repay, and reborrow up to the aggregate principal commitment amount of $4,000,000 until its maturing on February 1, 2019. Amounts borrowed under the seasonal revolving loan bear interest at a variable weekly rate equal to 2.850% above the rate quoted by LIBOR Index rate, which was 4.93% at July 31, 2018. The Company also agreed to pay an unused commitment fee on the unused portion of the seasonal revolving loan commitment at the rate of 0.250% per annum. Estimated annual maturities of long-term debt at July 31, 2018 are as follows based on the most recent debt agreements: 2019 $ 322,048 2020 318,253 2021 339,097 2022 138,205 Total debt $ 1,117,603

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Jul. 31, 2018
COMMITMENTS AND CONTINGENCIES.
COMMITMENTS AND CONTINGENCIES	7. Corn Forward Contracts At July 31, 2018, the Company had cash and basis contracts for forward corn purchase commitments totaling approximately 4,189,000 bushels for various delivery periods through June 2019. Ethanol Forward Contracts At July 31, 2018, the Company had fixed and basis contracts to sell approximately $11,716,000 of ethanol for various delivery periods through September 2018. Distillers’ Grains Forward Contracts At July 31, 2018, the Company had forward contracts to sell approximately $2,517,000 of distillers’ grains for various delivery periods through August 2018. Corn Oil Forward Contracts At July 31, 2018, the Company had forward contracts to sell approximately $775,000 of corn oil for various delivery periods through December 2018. Railcar Damages In accordance with certain railcar lease agreements, at expiration, the Company is required to return the railcars in good condition, less normal wear, and tear. Primarily due to the ongoing maintenance and repair activities performed on its railcars, the Company has determined that no accrual for damages to leased railcar is necessary and an estimate of the possible range of loss cannot be made.

MEMBERS' EQUITY

MEMBERS' EQUITY	9 Months Ended
	Jul. 31, 2018
MEMBERS' EQUITY.
MEMBERS' EQUITY	8. Heron Lake BioEnergy, LLC is authorized to issue up to 80,000,000 capital units, of which 65,000,000 have been designated Class A units and 15,000,000 have been designated as Class B units. Members of Heron Lake BioEnergy, LLC are holders of units who have been admitted as members and who hold at least 2,500 units. Any holder of units who is not a member will not have voting rights. Transferees of units must be approved by Heron Lake BioEnergy, LLC’s Board of Governors to become members. Members are entitled to one vote for each unit held. Subject to Heron Lake BioEnergy, LLC’s Member Control Agreement, all units share equally in the profits and losses and distributions of assets on a per unit basis. Heron Lake BioEnergy, LLC has a total of 62,932,107 Class A units and 15,000,000 Class B units issued and outstanding, for an aggregate total of 77,932,107 units issued and outstanding at July 31, 2018 and October 31, 2017. On December 21, 2017, Heron Lake BioEnergy, LLC’s Board of Governors declared a cash distribution of $0.11 per unit, or approximately $8,573,000, for unit holders of record as of December 21, 2017. The distribution was paid in January 2018.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Jul. 31, 2018
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	9. Granite Falls Energy, LLC The Company has a management services agreement with GFE. Under the terms of the management services agreement, GFE supplies its own personnel to act as part-time officers and managers of the Company for the positions of Chief Executive Officer, Chief Financial Officer, and Commodity Risk Manager and the Company pays GFE 50% of the total salary, bonuses, and other expenses and costs incurred by GFE for the three management positions. The management services agreement automatically renews for successive one-year terms unless and until the Company or GFE gives the other party 90-days written notice of termination prior to expiration of then current term. The management services agreement may also be terminated by either party for cause under certain circumstances. Total expenses under this agreement were approximately $115,000 and $121,000 for the three months ended July 31, 2018 and 2017, respectively, and approximately $353,000 and $320,000 for the nine months ended July 31, 2018 and 2017, respectively. Corn Purchases - Members The Company purchased corn from board members of approximately $3,382,000 and $143,000 for the three months ended July 31, 2018 and 2017, respectively, and approximately $10,479,000 and $5,737,000 for the nine months ended July 31, 2018 and 2017, respectively. Of this total, approximately $0 and $607,000 was included in accounts payable at July 31, 2018 and October 31, 2017, respectively. Agrinatural During 2013, the Company borrowed $300,000 from the non-controlling interest member of Agrinatural. This note was paid in full in January 2018. Total interest paid in relation to this note payable amounted to approximately $0 and $1,000 for the three months ended July 31, 2018 and 2017, respectively, and approximately $1,000 and $5,000 for the nine months ended July 31, 2018 and 2017, respectively. Swan Engineering Agrinatural has a management and operating agreement with Swan Engineering, Inc. (“SEI”). SEI is an affiliate of Rural Energy Solutions, LLC (“RES”), the 27% minority owner of Agrinatural. A controlling interest of RES is owned by the principal of SEI. Under the management and operating agreement, SEI provides Agrinatural with day-to-day management and operation of Agrinatural's pipeline distribution business. In exchange for these services, Agrinatural pays SEI an aggregate management fee equal to the fixed monthly base fee plus the variable customer management fee based on the number of customers served on the pipeline less the agreed monthly fee reduction of $4,500. The Company paid monthly base fee and variable customer management fee of approximately $50,000 and $48,000 for the three months ended July 31, 2018 and 2017, respectively, and approximately $147,000 and $145,000 for the nine months ended July 31, 2018 and 2017, respectively . The management and operating agreement with SEI expires July 1, 2019, unless earlier terminated for cause as defined in the agreement. Agrinatural also has a project management agreement with SEI. Pursuant to the project management agreement, SEI supervises all Agrinatural's pipeline construction projects. These projects are constructed by unrelated third-party pipeline construction companies. Under the project management agreement, Agrinatural pays SEI a total of 10% of the actual capital expenditures for construction projects approved by Agrinatural's board of managers, excluding capitalized marketing costs. The Company recorded project management fees and capital work of approximately $34,000 and $15,000 for the three months ended July 31, 2018 and 2017, respectively, and approximately $49,000 and $27,000 for the nine months ended July 31, 2018 and 2017, respectively . The project management with SEI expires June 30, 2019, unless earlier terminated for cause as defined in the agreement.

BUSINESS SEGMENTS

BUSINESS SEGMENTS	9 Months Ended
	Jul. 31, 2018
BUSINESS SEGMENTS
BUSINESS SEGMENTS	10. The Company groups its operations into the following two business segments: Ethanol Production Ethanol and co-product production and sales Natural gas pipeline Ownership and operations of natural gas pipeline Segment reporting is intended to give financial statement users a better view of how the Company manages and evaluates its businesses. The accounting policies for each segment are the same as those described in the summary of significant accounting policies. Segment income or loss does not include any allocation of shared-service costs. Segment assets are those that are directly used in or identified with segment operations. Inter-segment balances and transactions have been eliminated. The following tables summarize financial information by segment and provide a reconciliation of segment revenue, contribution to operating income, and total assets: Three Months Ended Nine Months Ended July 31, 2018 July 31, 2017 July 31, 2018 July 31, 2017 Revenue: (unaudited) (unaudited) (unaudited) (unaudited) Ethanol production $ 26,161,809 $ 28,451,695 $ 82,906,086 $ 81,115,207 Natural gas pipeline 522,551 527,432 2,537,485 2,113,045 Eliminations (431,444) (437,238) (1,337,348) (1,305,505) Total Revenue $ 26,252,916 $ 28,541,889 $ 84,106,223 $ 81,922,747 Three Months Ended Nine Months Ended July 31, 2018 July 31, 2017 July 31, 2018 July 31, 2017 Operating Income: (unaudited) (unaudited) (unaudited) (unaudited) Ethanol production $ 182,265 $ 1,330,073 $ 1,317,240 $ 4,328,586 Natural gas pipeline 358,466 351,100 1,615,246 1,356,438 Eliminations (167,688) (162,285) (557,481) (518,008) Operating Income $ 373,043 $ 1,518,888 $ 2,375,005 $ 5,167,016 July 31, 2018 October 31, 2017 Assets: (unaudited) Ethanol production $ 48,243,110 $ 56,373,335 Natural gas pipeline 12,146,400 12,499,296 Total Assets $ 60,389,510 $ 68,872,631

SUMMARY OF SIGNIFICANT ACCOUN16

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Jul. 31, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business	Nature of Business Heron Lake BioEnergy, LLC’s wholly owned subsidiary, HLBE Pipeline Company, LLC (“HLBE Pipeline Company”), owns 73% of Agrinatural Gas, LLC (“Agrinatural”). Agrinatural operates a natural gas pipeline that provides natural gas to Heron Lake BioEnergy, LLC 's ethanol production facility and other customers.
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation The condensed consolidated unaudited financial statements as of July 31, 2018 include the accounts of Heron Lake BioEnergy, LLC and its wholly owned subsidiary, HLBE Pipeline Company (collectively the “Company”). Given the Company’s control over the operations of Agrinatural and its majority voting interest, the Company consolidates the unaudited financial statements of Agrinatural with its consolidated unaudited financial statements, with the equity and earnings (loss) attributed to the remaining 27% non-controlling interest identified separately in the accompanying condensed consolidated balance sheets and statements of operations. All significant intercompany balances and transactions are eliminated in consolidation. The condensed consolidated unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. These condensed consolidated unaudited financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company’s audited consolidated financial statements for the year ended October 31, 2017, contained in the Company’s annual report on Form 10-K. In the opinion of management, the condensed consolidated unaudited financial statements reflect all adjustments consisting of normal recurring accruals that we consider necessary to present fairly the Company’s results of operations, financial position, and cash flows. The results reported in these condensed consolidated unaudited financial statements should not be regarded as necessarily indicative of results that may be expected for any other fiscal period or for the fiscal year.
Accounting Estimates	Accounting Estimates Management uses estimates and assumptions in preparing these condensed consolidated unaudited financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for significant matters including, among others, the economic lives of property and equipment, the analysis of impairment of long-lived assets, valuation of commodity derivative instruments, inventory, inventory purchase and sales commitments, and evaluation of railcar damages contingency. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. Actual results could differ from those estimates.
Noncontrolling Interest	Non-controlling Interest Amounts recorded as non-controlling interest on the balance sheets relate to the net investment by an unrelated party in Agrinatural. Income and losses are allocated to the members of Agrinatural based on their respective percentage of membership units held. Pursuant to the firm natural gas transportation agreement , Agrinatural will provide natural gas to the plant with a specified price per MMBTU for a term ending on October 31, 2021, with one automatic renewal option to extend the term for an additional five years.
Revenue Recognition	Revenue Recognition The Company generally sells ethanol and related products pursuant to marketing agreements. Revenues from the production of ethanol and the related products are recorded when the customer has taken title and assumed the risks and rewards of ownership, prices are fixed or determinable and collectability is reasonably assured. Title is generally assumed by the buyer at the Company’s shipping point. In accordance with the Company's agreements for the marketing and sale of ethanol and related products, marketing fees and commissions due to the marketers are deducted from the gross sales price as earned. These fees and commissions are recorded net of revenues as they do not provide an identifiable benefit that is sufficiently separable from the sale of ethanol and related products. Shipping costs incurred by the Company in the sale of ethanol are not specifically identifiable and as a result, are recorded based on the net selling price reported to the Company from the marketer. Shipping costs incurred by the Company in the sale of ethanol related products are included in cost of goods sold. Agrinatural recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, or services have been rendered, the fee for the arrangement is fixed or determinable and collectability is reasonably assured.
Inventory	Inventory Inventory is stated at the lower of cost or net realizable value. Cost for all inventories is determined using the first in first out method (FIFO). Net realizable value is the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and spare parts. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers’ grains, and corn oil.
Derivative Instruments	Derivative Instruments From time to time the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives on the balance sheets at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings. Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our condensed consolidated unaudited financial statements. In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company's ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes. The Company has adopted authoritative guidance related to “Derivatives and Hedging”, and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. See further discussion in Note 4.
Reportable Operating Segments	Reportable Operating Segments Accounting Standards Codification (“ASC”) 280, “Segment Reporting”, establishes the standards for reporting information about segments in financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on the related business nature and expected financial results criteria set forth in ASC 280, the Company has two reportable operating segments for financial reporting purposes. · Ethanol Production . Based on the nature of the products and production process and the expected financial results, the Company’s operations at its ethanol plant, including the production and sale of ethanol and its co-products, are aggregated into one financial reporting segment. · Natural Gas Pipeline . The Company has majority ownership in Agrinatural, through its wholly owned subsidiary, HLBE Pipeline, LLC, and operations of Agrinatural’s natural gas pipeline are aggregated into another financial reporting segment.

INVENTORY (Tables)

INVENTORY (Tables)	9 Months Ended
	Jul. 31, 2018
INVENTORY
Schedule of inventory	July 31, 2018 October 31, 2017 (unaudited) Raw materials $ 1,197,309 $ 1,442,844 Work in process 682,900 652,296 Finished goods 3,439,800 3,747,779 Supplies 1,196,255 1,221,425 Totals $ 6,516,264 $ 7,064,344

DERIVATIVE INSTRUMENTS (Tables)

DERIVATIVE INSTRUMENTS (Tables)	9 Months Ended
	Jul. 31, 2018
DERIVATIVE INSTRUMENTS
Schedule of derivative financial instruments	The following tables provide details regarding the Company’s derivative instruments at July 31, 2018, none of which are designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 286,601 $ 35,196 Totals $ 286,601 $ 35,196 The following tables provide details regarding the Company’s derivative instruments at October 31, 2017, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts Commodity derivative instruments $ 141,644 $ — Ethanol contracts Commodity derivative instruments — 12,249 Natural gas contracts Commodity derivative instruments — 15,381 Totals $ 141,644 $ 27,630
Schedule of gains (losses) from derivative instruments	Consolidated Statement of Three Months Ended July 31, Nine Months Ended July 31, Operations Location 2018 2017 2018 2017 Corn contracts Cost of goods sold $ 916,800 $ 233,003 $ 425,139 $ 646,489 Ethanol contracts Revenues (142,625) 31,906 53,747 (238,886) Natural gas contracts Cost of goods sold — — (1,598) — Total gain $ 774,175 $ 264,909 $ 477,288 $ 407,603

FAIR VALUE (Tables)

FAIR VALUE (Tables)	9 Months Ended
	Jul. 31, 2018
FAIR VALUE.
Schedule of assets and liabilities accounted for on a recurring basis	The following table sets forth, by level, the Company assets and liabilities that were accounted for at fair value on a recurring basis at July 31, 2018: Fair Value Measurement Using Carrying Amount in Quoted Prices Significant Other Significant Consolidated in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative instruments - Corn $ 286,601 $ 286,601 $ 286,601 $ — $ — Financial Liabilities: Commodity Derivative instruments - Corn $ 35,196 $ 35,196 $ — $ 35,196 $ — The following table sets forth, by level, the Company assets and liabilities that were accounted for at fair value on a recurring basis at October 31, 2017: Fair Value Measurement Using Carrying Amount in Quoted Prices in Significant Other Significant Consolidated Active Markets Observable Inputs Unobservable Inputs Financial Assets: Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative instruments - Corn $ 141,644 $ 141,644 $ 141,644 $ — $ — Financial Liabilities: Commodity Derivative instruments - Ethanol $ 12,249 $ 12,249 $ 18,000 $ (5,751) $ — Commodity Derivative instruments - Natural Gas $ 15,381 $ 15,381 $ — $ 15,381 $ —

DEBT FINANCING (Tables)

DEBT FINANCING (Tables)	9 Months Ended
	Jul. 31, 2018
DEBT FINANCING
Schedule of long-term debt	July 31, 2018 October 31, 2017 (unaudited) Amended revolving term note payable to lending institution, see terms below. $ — $ — Seasonal line of credit payable to lending institution, see terms below. — — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in 2021. The Company made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 1,094,236 1,241,171 Assessment payable as part of water supply agreement, due in monthly installments of $3,942 with interest at 8.73%, enforceable by statutory lien, with the final payment due in 2019. 23,367 56,514 Note payable to non-controlling interest member of Agrinatural. Interest is at One Month LIBOR plus 4.0%, which was approximately 5.24% at October 31, 2017. The note was paid in full in January 2018. — 100,000 Totals 1,117,603 1,397,685 Less amounts due within one year 322,048 432,183 Net long-term debt $ 795,555 $ 965,502
Schedule of estimated maturities of long-term debt	2019 $ 322,048 2020 318,253 2021 339,097 2022 138,205 Total debt $ 1,117,603

BUSINESS SEGMENTS (Tables)

BUSINESS SEGMENTS (Tables)	9 Months Ended
	Jul. 31, 2018
BUSINESS SEGMENTS
Schedule of primary business segments	Ethanol Production Ethanol and co-product production and sales Natural gas pipeline Ownership and operations of natural gas pipeline
Reconciliation of segment revenue	Three Months Ended Nine Months Ended July 31, 2018 July 31, 2017 July 31, 2018 July 31, 2017 Revenue: (unaudited) (unaudited) (unaudited) (unaudited) Ethanol production $ 26,161,809 $ 28,451,695 $ 82,906,086 $ 81,115,207 Natural gas pipeline 522,551 527,432 2,537,485 2,113,045 Eliminations (431,444) (437,238) (1,337,348) (1,305,505) Total Revenue $ 26,252,916 $ 28,541,889 $ 84,106,223 $ 81,922,747
Schedule of operating income and total assets	Three Months Ended Nine Months Ended July 31, 2018 July 31, 2017 July 31, 2018 July 31, 2017 Operating Income: (unaudited) (unaudited) (unaudited) (unaudited) Ethanol production $ 182,265 $ 1,330,073 $ 1,317,240 $ 4,328,586 Natural gas pipeline 358,466 351,100 1,615,246 1,356,438 Eliminations (167,688) (162,285) (557,481) (518,008) Operating Income $ 373,043 $ 1,518,888 $ 2,375,005 $ 5,167,016 July 31, 2018 October 31, 2017 Assets: (unaudited) Ethanol production $ 48,243,110 $ 56,373,335 Natural gas pipeline 12,146,400 12,499,296 Total Assets $ 60,389,510 $ 68,872,631

SUMMARY OF SIGNIFICANT ACCOUN22

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Nature of Business (Details) gal in Millions	9 Months Ended
	Jul. 31, 2018Optiongal
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating capacity of Ethanol plant owned and operated | gal	72.3
Agrinatural, LLC
Noncontrolling interest
Number of renewal options | Option	1
Term of renewed contract	5 years
Agrinatural, LLC
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Noncontrolling interest, ownership percentage by noncontrolling owners	27.00%
HLBE Pipeline Company, LLC | Agrinatural, LLC
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ownership percentage	73.00%

SUMMARY OF SIGNIFICANT ACCOUN23

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment (Details)	9 Months Ended
	Jul. 31, 2018segment
Segment Reporting Information
Number of reportable segments	2
Ethanol production
Segment Reporting Information
Number of reportable segments	1

RISKS AND UNCERTAINTIES (Detail

RISKS AND UNCERTAINTIES (Details)	9 Months Ended
	Jul. 31, 2018
Total revenues | Customer | Ethanol production | Minimum
RISKS AND UNCERTAINTIES
Concentration percentage	70.00%
Total revenues | Customer | Ethanol production | Maximum
RISKS AND UNCERTAINTIES
Concentration percentage	90.00%
Cost of goods sold | Product | Corn | Minimum
RISKS AND UNCERTAINTIES
Concentration percentage	70.00%
Cost of goods sold | Product | Corn | Maximum
RISKS AND UNCERTAINTIES
Concentration percentage	90.00%

INVENTORY (Details)

INVENTORY (Details) - USD ($)	9 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Oct. 31, 2017
Inventory
Raw materials	$ 1,197,309		$ 1,442,844
Work in process	682,900		652,296
Finished goods	3,439,800		3,747,779
Supplies	1,196,255		1,221,425
Totals	6,516,264		$ 7,064,344
Ethanol production
Inventory
Loss on inventory	$ 169,000	$ 65,000

DERIVATIVE INSTRUMENTS (Details

DERIVATIVE INSTRUMENTS (Details)	9 Months Ended	12 Months Ended
	Jul. 31, 2018USD ($)bu	Oct. 31, 2017USD ($)MMBTUbugal
Derivative instruments
Restricted cash	$ 23,620
Financial Assets	286,601	$ 141,644
Financial Liabilities	$ 35,196	$ 27,630
Corn contracts
Derivative instruments
Notional volume | bu	4,125,000	1,120,000
Corn contracts | Long/Purchase
Derivative instruments
Notional volume | bu		215,000
Corn contracts | Short/Sale
Derivative instruments
Notional volume | bu		905,000
Ethanol contracts
Derivative instruments
Notional volume | gal		420,000
Natural gas contracts
Derivative instruments
Notional energy | MMBTU		120,000
Derivatives held by a broker
Derivative instruments
Restricted cash	$ 24,000	$ 0
Derivatives held by a broker | Accounts Payable
Derivative instruments
Financial Liabilities	0	12,000
Derivatives not designated as hedging instruments
Derivative instruments
Financial Assets	286,601	141,644
Financial Liabilities	35,196	27,630
Derivatives not designated as hedging instruments | Corn contracts
Derivative instruments
Financial Assets	286,601	141,644
Financial Liabilities	$ 35,196
Derivatives not designated as hedging instruments | Ethanol contracts
Derivative instruments
Financial Liabilities		12,249
Derivatives not designated as hedging instruments | Natural gas contracts
Derivative instruments
Financial Liabilities		$ 15,381

DERIVATIVE INSTRUMENTS, Gains (

DERIVATIVE INSTRUMENTS, Gains (losses) (Details) - Derivatives not designated as hedging instruments - USD ($)	3 Months Ended		9 Months Ended
	Jul. 31, 2018	Jul. 31, 2017	Jul. 31, 2018	Jul. 31, 2017
Derivative Instruments
Gain (loss) from derivative instruments	$ 774,175	$ 264,909	$ 477,288	$ 407,603
Corn contracts | Cost of goods sold.
Derivative Instruments
Gain (loss) from derivative instruments	916,800	233,003	425,139	646,489
Ethanol contracts | Revenues.
Derivative Instruments
Gain (loss) from derivative instruments	$ (142,625)	$ 31,906	53,747	$ (238,886)
Natural gas contracts | Cost of goods sold.
Derivative Instruments
Gain (loss) from derivative instruments			$ (1,598)

FAIR VALUE (Details)

FAIR VALUE (Details) - USD ($)	Jul. 31, 2018	Oct. 31, 2017
Fair value measurements
Financial Assets	$ 286,601	$ 141,644
Financial Liabilities	35,196	27,630
Corn contracts | Recurring basis | Carrying Amount
Fair value measurements
Financial Assets	286,601	141,644
Financial Liabilities	35,196
Corn contracts | Recurring basis | Fair Value
Fair value measurements
Financial Assets	286,601	141,644
Financial Liabilities	35,196
Corn contracts | Level 1 | Recurring basis | Fair Value
Fair value measurements
Financial Assets	286,601	141,644
Corn contracts | Level 2 | Recurring basis | Fair Value
Fair value measurements
Financial Liabilities	$ 35,196
Ethanol contracts | Recurring basis | Carrying Amount
Fair value measurements
Financial Liabilities		12,249
Ethanol contracts | Recurring basis | Fair Value
Fair value measurements
Financial Liabilities		12,249
Ethanol contracts | Level 1 | Recurring basis | Fair Value
Fair value measurements
Financial Liabilities		18,000
Ethanol contracts | Level 2 | Recurring basis | Fair Value
Fair value measurements
Financial Liabilities		(5,751)
Natural gas contracts | Recurring basis | Carrying Amount
Fair value measurements
Financial Liabilities		15,381
Natural gas contracts | Recurring basis | Fair Value
Fair value measurements
Financial Liabilities		15,381
Natural gas contracts | Level 2 | Recurring basis | Fair Value
Fair value measurements
Financial Liabilities		$ 15,381

DEBT FINANCING (Details)

DEBT FINANCING (Details) - USD ($)	Mar. 29, 2018	Jul. 31, 2018	Oct. 31, 2017
DEBT FACILITIES
Long-term debt		$ 1,117,603	$ 1,397,685
Less amounts due on demand or within one year		322,048	432,183
Net long term debt		$ 795,555	965,502
Amended revolving term note payable to lending institution
DEBT FACILITIES
Interest rate at end of period (as a percent)		5.18%
Amended revolving term note payable to lending institution | One-Month LIBOR
DEBT FACILITIES
Spread above variable interest rate (as a percent)	3.10%
Seasonal line of credit payable to lending institution
DEBT FACILITIES
Interest rate at end of period (as a percent)		4.93%
Seasonal line of credit payable to lending institution | One-Month LIBOR
DEBT FACILITIES
Spread above variable interest rate (as a percent)	2.85%
Assessments payable as part of water treatment agreement, with interest at 6.55%, due in 2021
DEBT FACILITIES
Long-term debt		$ 1,094,236	$ 1,241,171
Frequency of payment		semi-annual	semi-annual
Payment		$ 189,393	$ 189,393
Interest rate (as a percent)		6.55%	6.55%
Period of worth of debt		1 year	1 year
Deposit on debt service payments		$ 364,000	$ 364,000
Assessments payable as part of water supply agreement, with interest at 8.73%, due in 2019
DEBT FACILITIES
Long-term debt		$ 23,367	$ 56,514
Frequency of payment		monthly	monthly
Payment		$ 3,942	$ 3,942
Interest rate (as a percent)		8.73%	8.73%
Note payable to noncontrolling interest member of Agrinatural, Interest One Month LIBOR plus 4.0 %
DEBT FACILITIES
Long-term debt			$ 100,000
Interest rate at end of period (as a percent)			5.24%
Note payable to noncontrolling interest member of Agrinatural, Interest One Month LIBOR plus 4.0 % | One-Month LIBOR
DEBT FACILITIES
Spread above variable interest rate (as a percent)			4.00%

DEBT FINANCING - Additional inf

DEBT FINANCING - Additional information (Details) - USD ($)	Mar. 29, 2018	Mar. 01, 2015	Jul. 31, 2018	Dec. 31, 2017	Oct. 31, 2017	Feb. 28, 2015
Amended revolving term note payable to lending institution
Debt financing
Maximum borrowing capacity	$ 4,000,000					$ 28,000,000
Line of credit future reduction amounts		$ 3,500,000
Current borrowing capacity				$ 8,000,000
Aggregate principal amount available for borrowing			$ 4,000,000		$ 17,500,000
Interest rate at end of period (as a percent)			5.18%
Unused commitment fee per annum on the unused portion of debt (as a percent)	0.50%
Amended revolving term note payable to lending institution | One-Month LIBOR
Debt financing
Spread above variable interest rate (as a percent)	3.10%
Seasonal line of credit payable to lending institution
Debt financing
Maximum borrowing capacity	$ 4,000,000
Interest rate at end of period (as a percent)			4.93%
Unused commitment fee per annum on the unused portion of debt (as a percent)	0.25%
Seasonal line of credit payable to lending institution | One-Month LIBOR
Debt financing
Spread above variable interest rate (as a percent)	2.85%
CoBank
Debt financing
Annual fee	$ 2,500

DEBT FINANCING - Estimated annu

DEBT FINANCING - Estimated annual maturities (Details) - USD ($)	Jul. 31, 2018	Oct. 31, 2017
Estimated maturities of long-term debt
2,019	$ 322,048
2,020	318,253
2,021	339,097
2,022	138,205
Long-term debt	$ 1,117,603	$ 1,397,685

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details)	9 Months Ended
	Jul. 31, 2018USD ($)bu
COMMITMENTS AND CONTINGENCIES
Accrual for leased railcar damages	$ 0
Long/Purchase | Corn Forward Contracts
COMMITMENTS AND CONTINGENCIES
Notional volume | bu	4,189,000
Short/Sale | Ethanol Forward Contracts
COMMITMENTS AND CONTINGENCIES
Notional value	$ 11,716,000
Short/Sale | Distillers Grains Forward Contracts
COMMITMENTS AND CONTINGENCIES
Notional value	2,517,000
Short/Sale | Corn Oil Forward Contract
COMMITMENTS AND CONTINGENCIES
Notional value	$ 775,000

MEMBERS' EQUITY (Details)

MEMBERS' EQUITY (Details)	Dec. 21, 2017USD ($)$ / shares	Jul. 31, 2018Vote / sharesshares	Oct. 31, 2017shares
Members' Equity
Common Unit, Authorized		77,932,107	77,932,107
Minimum number of units held to be member		2,500
Number of votes per unit | Vote / shares		1
Common Unit, Issued		77,932,107	77,932,107
Common Unit, Outstanding		77,932,107	77,932,107
Distribution declared, per membership unit (in dollars per unit) | $ / shares	$ 0.11
Amount of distribution declared | $	$ 8,573,000
Maximum
Members' Equity
Common Unit, Authorized		80,000,000
Class A units
Members' Equity
Common Unit, Authorized		65,000,000
Common Unit, Issued		62,932,107	62,932,107
Common Unit, Outstanding		62,932,107	62,932,107
Class B units
Members' Equity
Common Unit, Authorized		15,000,000
Common Unit, Issued		15,000,000	15,000,000
Common Unit, Outstanding		15,000,000	15,000,000

RELATED PARTY TRANSACTIONS - (D

RELATED PARTY TRANSACTIONS - (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Jul. 31, 2018USD ($)	Jul. 31, 2017USD ($)	Jul. 31, 2018USD ($)item	Jul. 31, 2017USD ($)	Oct. 31, 2017USD ($)	Dec. 31, 2013USD ($)
Agrinatural, LLC
RELATED PARTY TRANSACTIONS
Noncontrolling interest, ownership percentage by noncontrolling owners	27.00%		27.00%
Board Members | Corn
RELATED PARTY TRANSACTIONS
Amount purchased from related party	$ 3,382,000	$ 143,000	$ 10,479,000	$ 5,737,000
Accounts Payable | Board Members | Corn
RELATED PARTY TRANSACTIONS
Amount of related party transaction			$ 0		$ 607,000
Granite Falls Energy LLC Excluding Heron Lake Bioenergy LLC
RELATED PARTY TRANSACTIONS
Percentage of costs for three management positions incurred by GFE paid by the Company			50.00%
Number of management positions of GFE partially paid for by the Company | item			3
Renewal term			1 year
Period of written notice for termination prior to renewal of agreement			90 days
Amount of related party transaction	115,000	121,000	$ 353,000	320,000
Agrinatural, LLC
RELATED PARTY TRANSACTIONS
Proceeds from noncontrolling interest						$ 300,000
Interest paid	0	1,000	1,000	5,000
Swan Engineering Inc. Management And Operating Agreement
RELATED PARTY TRANSACTIONS
Monthly base fee and variable customer management fees paid	50,000	48,000	147,000	145,000
Swan Engineering Inc. Project Management Agreement
RELATED PARTY TRANSACTIONS
Project management and capital work fees	$ 34,000	$ 15,000	49,000	$ 27,000
Agrinatural, LLC | Swan Engineering Inc. Management And Operating Agreement
RELATED PARTY TRANSACTIONS
Management fee reduction			$ 4,500
Agrinatural, LLC | Swan Engineering Inc. Project Management Agreement
RELATED PARTY TRANSACTIONS
Percentage of capital expenditures reimbursed to related parties			10.00%
Swan Engineering Inc. And Unrelated Third Party | Agrinatural, LLC
RELATED PARTY TRANSACTIONS
Noncontrolling interest, ownership percentage by noncontrolling owners	27.00%		27.00%

BUSINESS SEGMENTS (Details)

BUSINESS SEGMENTS (Details)	3 Months Ended		9 Months Ended
	Jul. 31, 2018USD ($)	Jul. 31, 2017USD ($)	Jul. 31, 2018USD ($)segment	Jul. 31, 2017USD ($)	Oct. 31, 2017USD ($)
Segment Reporting Information
Number of operating segments | segment			2
Revenue	$ 26,252,916	$ 28,541,889	$ 84,106,223	$ 81,922,747
Operating income	373,043	1,518,888	2,375,005	5,167,016
Assets	60,389,510		60,389,510		$ 68,872,631
Ethanol production
Segment Reporting Information
Assets	48,243,110		48,243,110		56,373,335
Natural gas pipeline
Segment Reporting Information
Assets	12,146,400		12,146,400		$ 12,499,296
Operating Segments | Ethanol production
Segment Reporting Information
Revenue	26,161,809	28,451,695	82,906,086	81,115,207
Operating income	182,265	1,330,073	1,317,240	4,328,586
Operating Segments | Natural gas pipeline
Segment Reporting Information
Revenue	522,551	527,432	2,537,485	2,113,045
Operating income	358,466	351,100	1,615,246	1,356,438
Intersegment Eliminations
Segment Reporting Information
Revenue	(431,444)	(437,238)	(1,337,348)	(1,305,505)
Operating income	$ (167,688)	$ (162,285)	$ (557,481)	$ (518,008)