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We most commonly see wormy lumber in Butternut, and sometimes also in Red Oak. The lumber comes from trees where insects got in and started to eat their way all over. Since the wood is kiln dried, the insects are dead, but the wormy pattern is something that some folks like for a really rustic look to a project. The size of the worm holes, and the quantity will vary from one board to another. Here is a picture of some wormy butternut:
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