Ceres Classic NAV Dips Amid Reduced Unrealized Gains

TL;DR

Ceres Classic L.P.'s investment performance is flagging, with unrealized gains evaporating – time to re-evaluate this fund.

AI Summary

Ceres Classic L.P. reported a net investment loss of $0.01 per Unit for the three months ended June 30, 2025, a slight improvement from the $0.02 loss per Unit in the prior-year period. The net realized and unrealized gains per Unit were $0.01 for the quarter, a significant decrease from $0.07 in the same period of 2024. For the six months ended June 30, 2025, the net investment loss per Unit was $0.02, consistent with the prior year, while net realized and unrealized gains per Unit plummeted to $0.01 from $0.15 in 2024. The total change in net asset value per Unit for the six months ended June 30, 2025, was a loss of $0.01, a stark contrast to the $0.13 gain reported in the first half of 2024. The partnership held significant Level 1 fair value measurements for recurring assets, totaling $1,000,000 as of June 30, 2025, primarily in futures contracts. Level 2 fair value measurements for recurring assets were $1,000,000, also mainly in futures, with no Level 3 measurements reported for recurring assets. The partnership's strategy involves investments in futures and forward contracts across various sectors including foreign exchange, metals, and softs.

Why It Matters

Ceres Classic L.P.'s significant drop in net realized and unrealized gains, from $0.15 to $0.01 per Unit year-over-year for the six months ended June 30, 2025, signals a challenging period for its investment strategy, particularly in futures and forward contracts. This performance could impact investor confidence and potentially lead to redemptions, especially given the competitive landscape of managed futures funds. Employees at Ceres Managed Futures LLC, the managing entity, may face pressure to improve returns. For the broader market, this reflects potential volatility or reduced opportunities in the commodities and foreign exchange markets where Ceres Classic L.P. primarily operates.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant decline in net realized and unrealized gains per Unit, from $0.15 in H1 2024 to $0.01 in H1 2025, indicating increased market volatility or less effective trading strategies. While the net investment loss per Unit remained stable at $0.02, the overall change in net asset value per Unit shifted from a $0.13 gain to a $0.01 loss, suggesting a higher risk of capital depreciation.

Analyst Insight

Investors should scrutinize Ceres Classic L.P.'s underlying investment strategies and market exposures, particularly given the sharp decline in unrealized gains. Consider diversifying away from this fund or reducing exposure if the trend of diminishing returns continues, as the current performance indicates potential underperformance in its managed futures and commodities segments.

Key Numbers

• $0.01 — Net investment loss per Unit (for Q2 2025, an improvement from $0.02 loss in Q2 2024)
• $0.01 — Net realized and unrealized gains per Unit (for Q2 2025, a decrease from $0.07 in Q2 2024)
• $0.02 — Net investment loss per Unit (for H1 2025, consistent with H1 2024)
• $0.01 — Net realized and unrealized gains per Unit (for H1 2025, a significant drop from $0.15 in H1 2024)
• -$0.01 — Total change in net asset value per Unit (for H1 2025, a reversal from a $0.13 gain in H1 2024)
• $1,000,000 — Level 1 fair value measurements (primarily futures contracts, as of June 30, 2025)
• $1,000,000 — Level 2 fair value measurements (primarily futures contracts, as of June 30, 2025)

Key Players & Entities

• Ceres Classic L.P. (company) — filer of the 10-Q
• Ceres Managed Futures LLC (company) — managing entity of Ceres Classic L.P.
• $0.01 (dollar_amount) — net investment loss per Unit for Q2 2025
• $0.02 (dollar_amount) — net investment loss per Unit for Q2 2024 and H1 2025
• $0.07 (dollar_amount) — net realized and unrealized gains per Unit for Q2 2024
• $0.15 (dollar_amount) — net realized and unrealized gains per Unit for H1 2024
• $0.13 (dollar_amount) — change in net asset value per Unit for H1 2024
• $1,000,000 (dollar_amount) — Level 1 fair value measurements for recurring assets as of June 30, 2025
• $1,000,000 (dollar_amount) — Level 2 fair value measurements for recurring assets as of June 30, 2025
• June 30, 2025 (date) — end of the reporting period

FAQ

Risk Factors

• Deterioration in Realized and Unrealized Gains [high — market]: The partnership experienced a significant drop in net realized and unrealized gains per Unit, falling to $0.01 for H1 2025 from $0.15 in H1 2024. This indicates a substantial decline in the profitability of its trading strategies, particularly in futures and forward contracts across foreign exchange, metals, and softs.
• Negative Change in Net Asset Value [high — market]: For the first half of 2025, Ceres Classic L.P. reported a total change in net asset value per Unit of -$0.01, a stark reversal from a gain of $0.13 in the same period of 2024. This suggests a broad underperformance across the partnership's investment portfolio.
• Reliance on Futures and Forward Contracts [medium — market]: The partnership's strategy heavily relies on futures and forward contracts. While these instruments offer leverage and diversification, they also carry significant volatility and risk, especially in volatile markets for foreign exchange, metals, and softs.
• Limited Profitability Despite Improved Net Investment Loss [medium — financial]: While the net investment loss per Unit improved slightly to $0.01 for Q2 2025 from $0.02 in Q2 2024, the overall financial performance is weak, with net realized and unrealized gains per Unit plummeting. This suggests that operational costs or other expenses are still outweighing investment income and trading profits.

Industry Context

Ceres Classic L.P. operates within the managed futures and commodities trading sector, which is characterized by high volatility and sensitivity to macroeconomic factors. The industry involves sophisticated strategies using derivatives like futures and forward contracts across diverse markets such as foreign exchange, metals, and soft commodities. Performance is heavily influenced by market trends, geopolitical events, and the manager's ability to navigate complex price movements.

Regulatory Implications

As a partnership trading in futures and forward contracts, Ceres Classic L.P. is subject to regulations by bodies like the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). Compliance with reporting requirements, risk management standards, and anti-fraud provisions is critical. Any significant trading losses or operational failures could attract regulatory scrutiny.

What Investors Should Do

1. Review the partnership's trading strategy and risk management protocols.
2. Analyze the specific drivers behind the decrease in gains for H1 2025.
3. Monitor the fair value hierarchy for future filings.

Key Dates

• 2025-06-30: End of Second Quarter and First Half of 2025 — Reporting period for the financial results, including net investment loss, realized/unrealized gains, and change in net asset value per Unit.
• 2024-06-30: End of Second Quarter and First Half of 2024 — Prior year comparative period for financial results, highlighting a significant decrease in gains and a reversal in net asset value change.

Glossary

Net investment loss per Unit

The total investment income minus total expenses, divided by the average number of Units outstanding, resulting in a loss. (Indicates the operational profitability of the partnership before considering trading gains or losses.)

Net realized and unrealized gains (losses) per Unit

The profit or loss from the sale of investments (realized) and the change in value of investments still held (unrealized), per Unit. (Crucial for understanding the performance of the partnership's trading strategies and its ability to generate profits from market movements.)

Total change in net asset value per Unit

The overall increase or decrease in the value of each Unit over a specific period, reflecting all income, gains, losses, and expenses. (Represents the ultimate performance metric for investors, showing the total return or loss on their investment.)

Level 1 fair value measurements

Valuation of assets based on unadjusted quoted prices in active markets for identical assets (e.g., exchange-traded futures). (Indicates the most liquid and transparent portion of the partnership's assets, primarily futures contracts totaling $1,000,000.)

Level 2 fair value measurements

Valuation of assets based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or inputs derived from market data (e.g., futures contracts with observable market data). (Represents a significant portion of the partnership's assets ($1,000,000), also primarily in futures, suggesting reliance on market-derived pricing.)

Futures contracts

Standardized contracts to buy or sell a specific commodity or financial instrument at a predetermined price on a specified future date. (A core investment instrument for Ceres Classic L.P., forming the basis of its Level 1 and Level 2 fair value measurements.)

Forward contracts

Customized contracts to buy or sell an asset at a specified price on a future date, traded over-the-counter (OTC). (Another key instrument in the partnership's strategy, though no specific fair value levels were detailed for these in the provided context.)

Year-Over-Year Comparison

Compared to the prior year's first half, Ceres Classic L.P. has seen a dramatic deterioration in performance. Net realized and unrealized gains per Unit have plummeted from $0.15 to $0.01, leading to a negative change in net asset value per Unit of -$0.01, a stark reversal from a $0.13 gain in H1 2024. While the net investment loss per Unit has slightly improved in the second quarter, the overall profitability and investor returns have significantly weakened, indicating a challenging market environment or strategy underperformance.

Filing Documents

• d908330d10q.htm (10-Q) — 1802KB
• d908330dex311.htm (EX-31.1) — 11KB
• d908330dex312.htm (EX-31.2) — 11KB
• d908330dex321.htm (EX-32.1) — 4KB
• d908330dex322.htm (EX-32.2) — 4KB
• 0001193125-25-176474.txt ( ) — 7485KB
• ck0001066656-20250630.xsd (EX-101.SCH) — 670KB
• d908330d10q_htm.xml (XML) — 1976KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements . Ceres Classic L.P. Consolidated Statements of Financial Condition June 30, 2025 (Unaudited) December 31, 2024 Assets: Equity in trading account: Unrestricted cash $ 101,427,249 $ 116,041,683 Restricted cash 25,026,651 25,673,499 Foreign cash (cost $ 1,147,046 and $ 1,029,782 at June 30, 2025 and December 31, 2024, respectively) 1,208,782 1,025,300 Net unrealized appreciation on open futures contracts 1,742,317 2,269,270 Net unrealized appreciation on open forward contracts 326,143 1,672,427 Total equity in trading account 129,731,142 146,682,179 Interest receivable 340,036 405,325 Total assets $ 130,071,178 $ 147,087,504 Liabilities and Partners' Capital: Liabilities: Accrued expenses: Administrative and General Partner's fees $ 80,872 $ 88,886 Management fees 125,512 145,970 Professional fees 252,720 247,616 Redemptions payable to General Partner - 75,000 Redemptions payable to Limited Partners 680,650 889,494 Total liabilities 1,139,754 1,446,966 Partners' Capital: General Partner, Class Z, 119,150.531 Units outstanding at June 30, 2025 and December 31, 2024 1,443,659 1,540,021 Limited Partners, Class A, 4,593,461.609 and 4,849,003.081 Units outstanding at June 30, 2025 and December 31, 2024, respectively 127,353,521 143,957,312 Limited Partners, Class Z, 11,079.649 Units outstanding at June 30, 2025 and December 31, 2024 134,244 143,205 Total partners' capital (net asset value) 128,931,424 145,640,538 Total liabilities and partners' capital $ 130,071,178 $ 147,087,504 Net asset value per Unit: Class A $ 27.72 $ 29.69 Class Z $ 12.12 $ 12.93 See accompanying notes to consolidated financial statements. 1 Ceres Classic L.P. Consolidated Condensed Schedule of Investments June 30, 2025 (Unaudited) Notional ($)/ Number of Contracts Fair Value % of Partners' Capital Futures Contracts Purchased

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) 1. Organization: Ceres Classic L.P. (the "Partnership") is a Delaware limited partnership organized in 1998 to engage primarily in the speculative trading of futures contracts, options on futures and forward contracts, forward contracts on physical commodities and other commodity interests, including, but not limited to, foreign currencies, financial instruments, metals, energy and agricultural products (collectively, "Futures Interests") (refer to Note 4 , "Financial Instrument Risks"). The General Partner (as defined below) may also determine to invest up to all of the Partnership's assets in United States ("U.S.") Treasury bills and/or money market mutual funds, including money market mutual funds managed by Morgan Stanley or its affiliates. Ceres Managed Futures LLC, a Delaware limited liability company, acts as the general partner ("Ceres" or the "General Partner") and commodity pool operator of the Partnership. The General Partner is a wholly-owned subsidiary of Morgan Stanley Capital Management LLC ("MSCM"). MSCM is ultimately owned by Morgan Stanley. Morgan Stanley is a publicly held company whose shares are listed on the New York Stock Exchange. Morgan Stanley is engaged in various financial services and other businesses. Morgan Stanley Smith Barney LLC, doing business as Morgan Stanley Wealth Management ("Morgan Stanley Wealth Management"), currently acts as the placement agent for the Partnership. Morgan Stanley Wealth Management is a principal subsidiary of MSCM. As of June 30, 2025, all trading decisions were made for the Partnership by Graham Capital Management, L.P. ("Graham"), Winton Capital Management Limited ("WCM"), EMC Capital Advisors, LLC ("EMC") and Campbell & Company, LP ("Campbell"), as the commodity trading advisors to the Partnership (each, a "Trading Advisor" and collectively, the "Trading Advisors"). Each Trading Advisor is allocated a portion of the Partnership's assets

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) The ongoing placement agent fee paid by the Partnership to Morgan Stanley Wealth Management for Class A unit holders is equal to an annual rate of 0.75% of the adjusted net assets of Class A units (computed monthly by multiplying the adjusted net assets of the Class A units by 0.75% and dividing the result thereof by 12). The administrative and general partner fee paid by the Partnership to Ceres for all limited partners is equal to an annual rate of 0.75% of the Partnership's net assets (as defined in the Partnership's Limited Partnership Agreement). The Partnership directly pays the brokerage fees and other transaction-related fees and expenses, as incurred and also pays its ongoing administrative, operating, offering and organizational expenses (including, but not limited to, periodic legal, accounting, administrative, filing, reporting and data processing fees) and its pro rata share of such expenses of any trading company to which the Partnership has allocated assets. The Trading Company has entered into a foreign exchange brokerage account agreement and a futures brokerage account agreement with MS&Co. The Partnership has also entered into a futures brokerage account agreement with MS&Co. Pursuant to these agreements, the Partnership, directly or indirectly through its investment in the Trading Company, pays MS&Co. (or will reimburse MS&Co., if previously paid) its allocable share of all trading fees for the clearing and, where applicable, execution of transactions as well as exchange, user, give-up, floor brokerage and National Futures Association fees (collectively, the "clearing fees"). The Partnership has also entered into a selling agreement with Morgan Stanley Wealth Management (as amended, the "Selling Agreement"). Pursuant to the Selling Agreement, Morgan Stanley Wealth Management is paid a monthly ongoing placement agent fee at the rates described above. The ongoing placement agent fee

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) 2. Basis of Presentation and Summary of Significant Accounting Policies: The accompanying consolidated financial statements and accompanying notes are unaudited but, in the opinion of the General Partner, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Partnership's financial condition at June 30, 2025 and the results of its operations and changes in partners' capital for the three and six months ended June 30, 2025 and 2024. These consolidated financial statements present the results of interim periods and do not include all of the disclosures normally provided in annual financial statements. These consolidated financial statements should be read together with the consolidated financial statements and notes included in the Partnership's Annual Report on Form 10-K (the "Form 10-K") filed with the Securities and Exchange Commission (the "SEC") for the year ended December 31, 2024. The December 31, 2024 information has been derived from the audited consolidated financial statements as of and for the year ended December 31, 2024. Due to the nature of commodity trading, the results of operations for the interim periods presented should not be considered indicative of the results that may be expected for the entire year. Use of Estimates . The preparation of consolidated financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires the General Partner to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. As a result, actual results could differ from these estimates, and those differences could be material. Profit Allocation. Except for class specific expenses, the

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) Partnership's Cash . The cash held by the Partnership that is available for Futures Interests trading is on deposit in a commodity brokerage account with MS&Co. The Partnership's restricted cash is equal to the cash portion of assets on deposit to meet margin requirements, as determined by the exchange or counterparty, and required by MS&Co. and/or JPM, as applicable. All of these amounts are maintained separately. At June 30, 2025 and December 31, 2024, the amount of cash held for margin requirements was $ 25,026,651 and $ 25,673,499 , respectively. Cash that is not classified as restricted cash is therefore classified as unrestricted cash. Restricted and unrestricted cash includes cash denominated in foreign currencies of $ 1,208,782 (cost of $ 1,147,046 ) and $ 1,025,300 (cost of $ 1,029,782 ) as of June 30, 2025 and December 31, 2024, respectively. Income Taxes. Income taxes have not been recorded as each partner is individually liable for the taxes, if any, on its share of the Partnership's income and expenses. The Partnership follows the guidance of ASC 740, "Income Taxes," which prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions taken or expected to be taken in the course of preparing the Partnership's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained "when challenged" or "when examined" by the applicable tax authority. Tax positions determined not to meet the more-likely-than-not threshold would be recorded as a tax benefit or liability in the Consolidated Statements of Financial Condition for the current year. If a tax position does not meet the minimum statutory threshold to avoid the incurring of penalties, an expense for the amount of the statutory penalty and interest, if applicable, shall be recognized in the Partnership's Consolidated Statements of Income and Expen

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) 3. Financial Highlights: Financial highlights for the limited partner class as a whole for the three and six months ended June 30, 2025 and 2024 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Class A Class Z Class A Class Z Class A Class Z Class A Class Z Per Unit Performance (for a unit outstanding throughout the period):* Net realized and unrealized gains (losses) $ ( 1.98 ) $ ( 0.86 ) $ ( 0.69 ) $ ( 0.30 ) $ ( 1.99 ) $

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