Risk SolutionS Grounded in Results
THE KCA Approach
Kluis Commodity Advisors offers flexible plans based on a farmer’s risk tolerance.
With a proven track record, the program has allowed farm managers to take the guesswork out of difficult marketing decisions. Thousands of producers with over two decades of results prove our effectiveness. Our Plan allows producers the peace of mind found in protecting themselves from downside risk while keeping their upside potential.
Many producers and consultants make sales decisions based on prediction. No matter how accurate predictions may have turned out in the past, there is always a guessing component – something unknown, something emotion-based.
At Kluis Commodity Advisors, our marketing plan is predetermined and mechanical. Our staff works to lead you through this system, all the while keeping your best interests at heart. We mechanically manage price risk and opportunities, and focus 100% of our efforts on implementing this system.
KCA’s Basic Plan focuses on the buying and rolling of puts in a conservative plan:
Buy Put Options on 100% of your expected production
Sell cash grain on rallies
Offset (sell) Put Options equal to bushels sold in the cash market (as market allows)
Roll Put Options up or down to manage equity and opportunity
Bring cash sales to a minimum of 25% of expected production if Option roll up is allowed
Consider re-owning bushels sold in the cash market, with Call Options
The KCA Advanced Plan uses the same risk management philosophy as the basic plan but utilizes more complex strategies:
- Use option strategies that may require margin requirement.
- Sell futures contracts instead of forward contracts at elevator.
Get the right RP Crop Insurance
Get hedges in place before harvest
Get Puts bought on unprotected bushels
BASIC Plan FAQs
The best time to start is immediately after you have identified what you will be producing. We recommend that this activity be initiated by March 1st.
You can hedge corn, soybeans, wheat, cotton, rice, milk, cattle, and hogs. We recommend that you use the program to cover only that production which has price risk on your operation. In most cases, that is 100%.
Market observations have allowed us to use prescribed increments for each commodity to best manage your risk, your equity, and your position relative to the marketplace. As we approach those times when a roll-up or a roll-down is required, we will be in contact with you in preparation for taking action.
We suggest making cash sales on rallies and on option roll-ups. At that time, the purchase of calls on those sold bushels may be a viable compliment to the sales you make.
When you know your production numbers or if your yield will be significantly reduced, we will need to assess how this impacts your previous marketing efforts. You may need to sell a corresponding amount of the options that you previously purchased, and move aggressively or address prior contract commitments on/for physical product.
One of the greatest privileges is coaching our clients through their use of the Basic Plan and making sure they feel comfortable. We will work with you on an individual basis until you have a commanding understanding of the program and are comfortable with your success.
Absolutely! Kluis Commodity Advisors has strong relationships with bankers and ag lenders across the country. We will explain all the details and benefits to both you and your banker. It has been our experience that lenders are more willing to lend after gaining an understanding of the program.