Wood pellets are made from 100% wood, typically the residue (sawdust and woodchips) from milling wood. When a wood mill processes a typical tree around 60% of that tree becomes planks or fencing posts, and the remaining 40% of the tree is residue. This sawdust mix is then dried to below 10% moisture content, before being forced through a press to make the pellets. The natural binding agent in the wood called lignin, holds the pellet together and gives the nice shiny surface.