In Canada pellets are made from wood scrap from sawmills. (slabs and sawdust) There should never be a pellet shortage here but before Christmas many sawmills had a temp shutdown because the falling economy reduced lumber demand. This created a situation of short pellet supply and many stores sold out. This in turn created greatly increased demand as people tried to stock up for the whole winter. When a store could get a truckload it would go within hours. People were travelling longer distances burning auto fuel trying to find more. I think that things have improved somewhat and probably the pellets are being produced from whole wood as well as scrap.
A pellet stove does not have a firebox or grate designed to burn whole wood.