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To answer the question, since no one else did: I don't know of any further use of fabric either, but I haven't completed the game yet. But it seems to be fairly typical for the game that certain groups of resources are scarce at first, then you get more of them, and eventually they become useless and just pile up in your inventory. I'm currently in Ireland and my trade posts shower me with goods, but I've already made all the trades I can. At least I can turn them into silver. But I don't really need silver any more either.
I really need silver if I'm going to upgrade all these items (at least the ones I find cool). I'm constantly below 1k silver.