Concerns about the quality of the U.S. cotton crop were on the rise after Hurricane Isaias struck the central and eastern portions of the Deep South late last week.
Rainfall was particularly heavy in Alabama, Georgia, and parts of the Carolinas. Areas impacted the most saw in excess of five to seven inches as the system moved through the region. Those states combine for an estimated 3.79 million bales, or 28.1% of the expected U.S. cotton production for 2026.
Given that the rainfall came after most bolls had opened, but before harvest was wrapped up, the storm adds uncertainty about the final quality of the U.S. crop. Excessive rain on already opened cotton bolls can result in reduced quality in many ways, but one of the most watched for is color grading.
Understanding USDA Color Grades
Each bale (or in some instances an average of samples taken from a module) of cotton that is ginned receives inspection from the USDA-AMS that then assesses it for various measures of quality. Color grades are two digits — the first being a measure of the cotton’s reflectiveness, and the second digit being a measure of the amount of discoloration in the fiber. For both digits, the lower each number, the higher the quality, generally speaking. Forty-one is often considered the standard quality, with grades having a first digit higher than 4 or a second digit higher than 1 often receiving sharper discounts if placed under a marketing loan, even if staple length and other gauges of quality are in line with the usual standards. The explanation can be hard to parse in text, and is likely easier understood by the graphic below:
The USDA provides updates to their classing data on a daily and weekly basis. The most recent weekly report shows that so far, color grades look to be lower in nearly all states impacted by the storm, with North Carolina seeing the largest drop. Given the classed cotton was harvested before Hurricane Isaias made landfall, it is unlikely that a sharp reversal in quality would occur as the ginning season ramps up in the Southeast.
In terms of marketing opportunities, premiums for higher quality cotton could steepen in 2026. Asian buyers of U.S. cotton, especially China, are typically looking for high quality fibers. The price difference in U.S. cotton compared to other regions like South America or West Africa makes the higher quality of U.S. fiber one of its main selling points, similar to how China sources higher quality U.S. beans in some instances rather than those from other competitors that may be available at lower prices. If U.S. cotton quality continues to deteriorate, that could result in more competitive bidding around the more limited high quality cotton that is in the marketplace.
Current average cash discounts based on quality grading are provided in this report, broken down by region, beginning on page two.