http://www.ag.auburn.edu/enpl/bulletins ... pillar.htm
"Tent Caterpillars - Family Lasiocampidae
The tent caterpillars are best known as important defoliators of forest and shade trees. Two species, eastern tent caterpillar and forest tent caterpillar (genus Malacosoma), are common in Alabama. Larvae of some groups within the family are reported to cause irritation when handled, apparently from contact with urticating setae. However, the principal "stinging" agent associated with the two Alabama species, and other members of the genus, is a substance produced by pupating caterpillars. Pupation occurs in a white to yellowish silk cocoon. During cocoon construction, caterpillars smear the structure with a thick, white to yellowish fluid. Subsequently this dries and becomes a fine powder which, if cocoons (See Photo 15) are handled, sifts out on the skin. Contact with the skin may cause an allergic reaction that appears as reddening and itching of the contact area. This reaction seems to occur only among allergy sufferers or individuals with very sensitive skin."