Cast on 38 stitches and work even in stockinette stitch for 45-inches. Bind off all stitches loosely.
Fold piece in half widthwise (22 inches x 22½ inches). Sew 12-inch seam along top of one long side of piece, from end toward fold, leaving remainder of edge open to form neck opening of poncho.
Cut strands of yarn, each approximately 18½ inches long. Attach on one side of poncho (along cast on and bound off edges of piece) approximately 1½ inches apart.