To dream of yarn represents a concern for safety. Doing something to make sure someone else stays safe or out of trouble. Yarn may also reflect the rules of safe, strict, or protective parenting.
Example: A boy dreamed of being chased by an evil ball of yarn. In waking life he felt constantly pressured by his overbearing mother to be perfectly safe and well-behaved. The evil ball of yarn reflected the strict rules being used to ensure the boy stayed safe.