- Commodity advisor since 1976 and introducing broker with R.J. O'Brien.
- Author of the weekly commodity newsletter, "The Al Kluis Report," and also the "Your Profit" column in Successful Farming magazine.
- Expert columnist for 13 years for Corn and Soybean Digest, which featured his "Marketing Strategies" column weekly.
- Has published two books on commodities trading. His co-author on the first book, Loren Kruse, is the now-retired Editor-in-Chief of Successful Farming magazine.
- Frequently quoted in major publications including the Wall Street Journal, and a frequent market analyst for the Linder Farm Radio News Network.
- Former executive director of the Minnesota Soybean Association before entering the markets full-time. Alan's family still owns a farm in southwest Minnesota and Al enjoys helping with fieldwork when the markets allow.
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Agriculture Commodity Trading - Hedging and Risk Mitigation
- Contrary opinion
- An investment theory that states when all, or most, investors are bullish the market will continue to rise, it will, in fact, go down. Likewise, when everyone believes the market will go down, it will rise instead. The effect is considered most significant at major market turning points. An overall consensus of opinion, whether bullish or bearish, usually marks an extreme.
- A financial contract that obligates one to either buy or sell a set amount of a commodity at a set price at a future time. Such contracts generally are traded on the floors of such exchanges as the Chicago Board of Trade.
- A strategy used by commodity producers or buyers to "lock in" prices with the intent of ensuring adequate margins while minimizing risk. This is done by taking a position in the futures market to offset anticipated cash sales or purchases. A producer, for instance, might sell futures contracts of corn for part of the expected production. If the cash price for corn at harvest is low, the higher price has been locked in by the futures contracts. Should the cash price rise, the producer may be limited on the total that can be earned, but is secure in knowing that a profit was, at least, guaranteed and that the higher price may be received for a portion of the crop.
- Margin call
- In futures trading and hedging, a margin call is a demand for additional funds by a broker or trader because of an adverse price movement. As an example, when a producer sells grain on the futures market to lock in a price, the price on that contract may fall and trigger a call for funds to be deposited to cover the loss. In the context of hedging, this loss is intended to be offset by gains elsewhere.
An option contract grants the right (but not the obligation) to buy or sell a specific amount of a given commodity at a specified price during a set period of time. Exercising a buy is a call option. Selling is know as a put option. Put options normally used by producers as a form of protection against price fluctuations because risk is limited to the price of the option (called the premium) when the option is offered against grain stocks owned or produced.