We prepared the following discussion and analysis to help you better understand our financial condition, changes in our financial condition, and results of operations for the three and nine month periods ended June 30, 2020, compared to the same periods of the prior fiscal year. This discussion should be read in conjunction with the financial statements, notes and information contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2019. Unless otherwise stated, references in this report to particular years, quarters, months, or periods refer to our fiscal years ended in September and the associated quarters, months, or periods of those fiscal years.

Forward Looking Statements

This report contains forward-looking statements that involve future events, our future performance and our future operations and actions. In some cases you can identify forward-looking statements by the use of words such as "may," "should," "anticipate," "believe," "expect," "plan," "future," "intend," "could," "estimate," "predict," "hope," "potential," "continue," or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the following factors:

• Reductions in the corn-based ethanol use requirement in the Federal

Renewable Fuels Standard;

• Small refinery exemptions from the RFS granted by the EPA;

• Reduced gasoline demand due to the COVID-19 pandemic;

• Lower oil prices which result in lower ethanol prices;

• Negative operating margins which result from lower ethanol prices;




•      Lower distillers grains prices which result from the Chinese anti-dumping
       and countervailing duty tariffs;


•      Lower ethanol prices due to the Chinese ethanol tariff and the Brazilian
       ethanol tariff;


•      Logistics difficulties preventing us from delivering our products to our
       customers;


•      Fluctuations in the price and market for ethanol, distillers grains and
       corn oil;


•      Availability and costs of products and raw materials, particularly corn
       and natural gas;


•      Changes in the environmental regulations that apply to our plant
       operations and our ability to comply with such regulations;


•      Ethanol supply exceeding demand and corresponding ethanol price reductions
       impacting our ability to operate profitably and maintain a positive spread
       between the selling price of our products and our raw material costs;


•      Our ability to generate and maintain sufficient liquidity to fund our
       operations and meet our necessary capital expenditures;

• Our ability to continue to meet our loan covenants;




•      Limitations and restrictions contained in the instruments and agreements
       governing our indebtedness;

• Results of our hedging transactions and other risk management strategies;

• Changes and advances in ethanol production technology; and

• Competition from alternative fuels and alternative fuel additives.

Overview

Red Trail Energy, LLC, a North Dakota limited liability company (the "Company," "Red Trail," or "we," "our," or "us"), owns and operates a 50 million gallon annual name-plate production ethanol plant near Richardton, North Dakota. Our revenues are derived from the sale and distribution of our ethanol, distillers grains and corn oil primarily in the continental United States. Corn is our largest cost component and our profitability is highly dependent on the spread between the price of corn and the price of ethanol.

On January 22, 2020 we entered into two loans with Cornerstone Bank ("Cornerstone"). We entered into a $10,000,000 revolving line of credit (the "Revolving Loan") and a $7,000,000 construction line of credit (the "Construction Loan") for our carbon dioxide capture and storage project. The details of these loans are described in more detail below in the section entitled "Capital Resources."




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