With Cotton going limit down at one point today (view chart here) on news that China will be raising rates to cool off rising prices in that country,  one of our clients called in asking where Dighton Capital has been over the last few months in “softs”.  After bouncing back strongly this year with gains of about 30%  across June,July and August, Dighton has oddly not traded in the past three months.

We have enjoyed watching Dighton Capital perform in the lesser known, so called ‘softs’ over the years, which includes commodities such as Coffee, Cotton, Cocoa, and Sugar futures. Their head trader has a background in Coffee imports, and he usually has a keen eye for that market in particular.

But despite Coffee’s run up of about 40% since the beginning of October,  Dighton hasn’t been active in that market. Nor did we see them putting on longs in Cotton when that market sold off heavily in November (down about -30% in 10 days in Nov) before bouncing back in Dec. (up abuot +4-% since the end of Nov.) That looked like a classic Dighton set up, where they could enter a soft market on a contrary move in hopes of a bounce back to the predominant trend.

In speaking with Dighton, they tell us they are analyzing the market constantly looking for trades, and that they simply haven’t identified good entry points of late.  We’ll take them at their word, but it does highlight what can be a frustration with a discretionary managed futures program like Dighton Capital. They aren’t guaranteed to be in every move in the markets they track, and can have long periods of inactivity while waiting for a proper trade set up (or on vacation).

With these “softs” moving again, look for Dighton Capital to be one of the stories of the new year (assuming they reengage them some time soon).  We’re hopeful it is a positive story… with them back in action soon and making a run at new equity highs in 2011.