The number of cargo holds assigned to trade establishes the maximum amount of any single commodity that you can offer for sale. Normally, however, the more important restriction on trade is the fact that each cargo hold can be used but once per turn.

The rule for the use of cargo holds is that the buying country picks up the commodities if that country  is a Great Power. If the country is not a Great Power, the selling country is responsible for delivery. 

If your cargo holds are all used delivering materials you sell to Neutral States or Tribes, you will be unable to accept the offers to buy which come from other countries because you will have no free cargo holds to pick up the commodities. 

Additionally, since commodities are always offered and accepted in the same predictable order, it is possible and often necessary to reserve cargo holds for offers that arrive later. For instance if you bid on wool and iron ore, but use all your cargo holds picking up wool, you would not be able to pick up any iron.  This means you might decide to reject some offers of wool in order to reserve cargo holds for iron ore