Commodities Held by Broker

6 Months Ended

Apr. 30, 2017

Commodities Held By Broker - Schedule Of Realized And Unrealized Gains And Losses Details

Commodities Held by Broker

NOTE 8 - COMMODITIES HELD BY BROKER:

The Company has used, and intends to continue to use in a limited capacity, short term coffee futures and options contracts primarily for the purpose of partially hedging and minimizing the effects of changing green coffee prices and to reduce our cost of sales. The commodities held at broker represent the market value of the Company’s trading account, which consists of options and future 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:

	April 30, 2017			October 31, 2016
Option Contracts	$	(178,650	)	$	(83,753	)
Future Contracts		(421,959	)		218,475
Total Commodities	$	(600,609	)	$	134,722

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 April 30, 2017, the Company held 75 futures contracts (generally with terms of three to four months) for the purchase of 2,812,500 pounds of green coffee at a weighted average price of $1.43 per pound. The fair market value of coffee applicable to such contracts was $1.33 per pound at that date. 2017, the Company held 20 option contracts for the purchase of 750,000 pounds of green coffee. The fair market value of these options was $26,700 at April 30, 2017.

At October 31, 2016, the Company held 22 futures contracts (generally with terms of three to four months) for the purchase of 825,000 pounds of green coffee at a weighted average price of $1.45 per pound. The fair market value of coffee applicable to such contracts was $1.64 per pound at that date. At October 31, 2016, the Company did not have any options.

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

	Three Months Ended April 30,
	2017			2016
Gross realized gains	$	322,389		$	445,314
Gross realized losses		(40,883	)		(368,745	)
Unrealized (loss) gain		(774,280	)		687,536
Total	$	(492,774	)	$	764,105

	Six Months Ended April 30,
	2017			2016
Gross realized gains	$	727,648		$	565,912
Gross realized losses		(500,901	)		(901,128	)
Unrealized (loss) gain		(735,331	)		689,088
Total	$	(508,584	)	$	353,872