Poncho pattern states K20 cast on 20 (using knit method) K20

do i use new yarn to cast on middle 20 what is knit method cast on :??

No, it doesn’t sound like you need to join new yarn – knitting on is a cast-on method that you can use to add stitches at the end of a row (or the middle, I guess!).
There is a video of it here: http://www.knittinghelp.com/knitting/videos//cast-on/knitting-on.mpg

You have to turn your work around to do it. When you’ve cast on enough stitches, you turn the work back to the front side and continue knitting. You have two options when doing the knitted cast on: 1) you can use the regular knit stitch as shown in tJulie’s video link; or 2) you can use the purl stitch and place the new loop on the left needle as you would with the regular knitted cast on. The second method is the one I use when doing stockinette stitch because when you do purl cast ons on the back of your work, the front side will look like knit stitches.