Currently, cotton is in an extreme positioning where the producers (red line on bottom panel) are actually net LONG. These are the farmers, etc who produce cotton and who typically are using the futures as a hedge against their physical product.
So they are almost always net short. For the data breakdown going back to the mid 2000's, there is not another time that producers have been net long. So given that price is hovering right near a 10 year low and the producers are indicating they don't need to hedge, I think this market is on the brink of a bear market low, or at least a major rally.
Speculative short interest is at an all time high, so there is plenty of "fuel" to feed a major vertical type rally if/when it gets going. Short covering can lead to quite large and rapid upward spikes off major lows.
The last major rally in this bear market was about 10% in 2 months. But a short covering rally off a low like this could be more like 20-30% in 2 months or less.
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