Not sure there's a cap on that particular component (there is on some as they get replaced by higher tier stuff, e.g. cave hopper -> rathound leather). I'll check when I get home, currently on the road.
In any case even if there isn't a hard cap on quality of an item, it's still limited by the random generation parameters of the area. That is higher level areas usually give higher level loot, some areas give higher levels of certain stuff, etc.