With circular needles and A, cast on 88 sts. Place marker and join, being careful not to twist sts. Knit every rnd until piece measures 31/4" from cast-on edge.
Rnd 1: * K7 A, k1 B; rep from * around.
Rnds 2-4: With A, knit.
Rnd 5: * K3 A, k1 B, k4A; rep from * around.
Rnds 6-8: With A, knit.
Rnd 9: Rep Rnd 1.
Rnds 10-12: With A, knit. Beg stem top:
Rnd 13: Rep rnd 5.
Rnd 14: * K2 A, k3 B, k3 A; rep from *. (Note: Beg with next rnd, draw yarn tightly across WS when changing colors to produce a puckered effect.) Change to double-pointed
Rnd 15: * K1 A, k5 B, k2 A; rep from *.
Rnd 16: * K7 B, k1 A; rep from *. Work remainder of hat with B only.
Rnd 17: Knit.
Beg decs: Rnd 18 * K6, k2tog; rep from *-77 sts.
Rnd 19: * K5, k2tog; rep from *-66 sts.
Rnds 20-23: In same way, cont to dec, working 1 st less each rnd before working k2tog-22 sts rem after Rnd 23.
Rnd 24: K2tog around-11 sts.
Rnds 25-30: Knit
Rnd 31: [K2tog] 3 times, k1-6 sts.
Rnd 32: [K2tog] 3 times. Cut yarn, draw through rem 3 sts, tighten and fasten off.