This was an excellent story with some beautiful poetic imagery. But there's a fine line between rich texture of language and being a bit too florid, and indulging in too many descriptive passages. This story would benefit a lot if some of the rather purple prose were cut.
I know it's difficult for a writer to stand back, read her work with an analytical eye and then self edit, but if you've got a weakness for too many descriptive passages, learn to do this!
For me the metaphor of the wolf works well, and it is wonderfully described, `but it's a bit over-used throughout. It reads as though she has spent her whole married life in the depths of grief and despair when I think the writer intends to show an on-going depression. When she talks to her grandmother in the attic and says, "The wolf, it is you," it didn't ring true. It was difficult to follow just why her depression was connected to her grandmother's personal history.
As one judge pointed out, a wolf is not a South African animal and doesn't fit with the Karoo theme, but the image of a jackal would have been too lightweight and not chilling enough.
The story itself seemed a bit disjointed, with the back-stories sort of piling up on each other as Jo remembers her grandmother alive, and then her grandmother's funeral, and we get the grandmother's story via the diary.
It veers into real fantasy as Jo finds the black book in the coat, which just magically appeared on the fence. When she noticed the coat on the fence, then it suddenly moves of its own accord back to the tree near the farm was a bit annoying and didn't really add anything to the story. I think the coat business might have worked better if she'd discovered it waiting for her up in the attic when she smelled lavender.
The voice of the grandmother in her black book was too pat, as though she were conveniently summing up her past years in China for the benefit of someone who would find the diary, and didn't sound like the writing of a young girl. It would have benefited from a more "human" voice but maybe the 2000 word limit meant the writer had to condense a bit.
But after all this criticism I have to say I found this a wonderful, richly textured story which well deserved to be in the top three.
In your next story, and I'm sure there will be many, you're a real writer, resist the impulse to use every beautiful phrase that comes to mind. Save half of them for the other stories!