Go and talk to Cecelia and she will tell you that you need to collect 3 clumps each of white and cream fleece, and two of silver wool from her son Colbert’s herd on the very southern grassy part of the island.
Talk to Colbert and he tells you that you need to collect some treats from Itzel on Yellow Brick Isle so you can get close enough to the herd to grab the wool. He tells you that you will need some items for Itzel which are: one bale of Daisy hay, two apples and three 4 leaf clovers for 12 Alpaca treats and $200. You can craft they hay at Hare Isle craft shop for 10 bunches of daisies and 1 bale of hay.
If you go to the hut next to the pond on Yellow Brick Isle the lady in there will tell you that she last saw Itzel wandering on the beach west of the hut. For me she was north of the double palm trees each time on the north west of the island. Talk to her with the items and she swaps you them for the treats.
Next go back to where Colbert is and talk to him and he will tell you who to get the wool from the herd. If you try and get the wrong colour of wool you will lose a treat. When you have collected the wool go back to Cecelia and give her all the colours and wait for her to finish, when she has talk to her again and go back to Yolanda.
You Completed Yarn for Yolanda. You earned 50,000 and 200 quest points.
Itzel will only make them for you while you're engaged in completing the quest, though. not after you've finished.