Sheep are sold through Mirabelle's shop in Sunshine Islands. You must first have a barn built by Gannon on your farm. Once you do, they will become available for purchase for 4,000G each. An adult sheep can be sheared using a pair of clippers every 3 day. Wool can be sold or turned into yarn. Brushing sheep with the Brush will increase their friendship and their wool quality. As you increase friendship points with your sheep, the quality of wool will go up. If you win the sheep contest, they will start to produce s-rank wool, and you'll be able to purchase Suffolk Sheep.