8. COMMODITIES HELD BY BROKER

9 Months Ended

Jul. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

COMMODITIES HELD BY BROKER

NOTE 8- COMMODITIES HELD BY BROKER:

The commodities held at the broker represent the market value of the Company’s trading account, which consists of options and futures contracts for coffee held with a brokerage firm.  The Company uses options and futures contracts, which are not designated or qualifying as hedging instruments, to partially hedge the effects of fluctuations in the price of green coffee beans.  Options and futures contracts are recognized at fair value in the condensed consolidated financial statements with current recognition of gains and losses on such positions.  The Company’s accounting for options and futures contracts may increase earnings volatility in any particular period.

The Company has open position contracts held by the broker, which are summarized as follows:

	July 31, 2012 (unaudited)			October 31, 2011
Option Contracts		7,849			129,750
Future Contracts		(174,150	)		(1,997,308	)
Total Commodities		(166,301	)		(1,867,558	)

The Company classifies its options and future contracts as trading securities and accordingly, unrealized holding gains and losses are included in earnings and not reflected as a net amount as a separate component of stockholders’ equity.

At July 31, 2012, the Company held 45 futures contracts for the purchase of 1,687,500 pounds of green coffee at a weighted average price of $1.7489 per pound.  The fair market value of coffee applicable to such contracts was $1.7440 per pound at that date.  The Company also held 70 futures contracts for the purchase of 2,625,000 pounds of green coffee at a weighted average price of $1.86 per pound.  The fair market value of coffee applicable to such contracts was $1.8545 per pound at that date.  At July 31, 2012, the Company did not hold any material option positions.

At July 31, 2011, the Company held 100 options (generally with terms of two months or less) covering an aggregate of 3,750,000 pounds of green coffee beans at $2.40 per pound.  The fair market value of these options, which was obtained from observable market data of similar instruments was $240,000.  At July 31, 2011, the Company did not hold any futures contracts.

The Company recorded realized and unrealized gains and losses respectively, on these contracts as follows:

	Three Months Ended July 31,
	2012 unaudited			2011 unaudited
Gross realized gains	$	2,698,809		$	611,696
Gross realized losses		(2,576,080	)		(855,906	)
Unrealized gains (losses)		404,643			(1,202,443	)
Total	$	527,372		$	(1,446,653	)

	Nine Months Ended July 31,
	2012 unaudited			2011 unaudited
Gross realized gains	$	3,187,914		$	2,464,269
Gross realized losses		(4,774,068	)		(861,140	)
Unrealized gains (losses)		1,701,256			(1,154,558	)
Total	$	115,102		$	448,571