Widespread abundance of yellownecked caterpillars in August cause many people to mistakenly believe they have gypsy moths. Gypsy moth caterpillars have long since pupated (early June) and become adults (late June-July.)
The yellownecked caterpillar and its closely related relative the walnut caterpillar are usually active in late August. Here is the information on the biology:
Yellownecked Caterpillar: Datana ministra (Drury)
Order and Family: Lepidoptera: Notodontidae
Host Plants: Most deciduous trees.
Damage and Diagnosis: White egg masses, each with up to 100 eggs are easily visible on leaf undersides. Young caterpillars will first skeletonize leaves, and then strip them of foliage as they mature. Younger larvae are brick-brown with yellow stripes along the body. Older larvae are black with yellow stripes and up to 2 inches long. Late season defoliation does not significantly harm tree health, but can be unsightly. Biology: After spending the winter as pupae, adults emerge in June and July and to lay egg masses on leaf undersides. Eggs hatch in late July into caterpillars that feed in groups through August. Large caterpillars pupate in the soil where they spend the winter. Control. Look for young caterpillars in July and treat before caterpillars become large and cause major damage. Broad spectrum insecticides are more effective against larger caterpillars than Bacillus thuringiensis 'Kurstaki'. Though late season defoliation is unsightly, it does minimal harm to tree health because it occurs close to the time of normal leaf drop.
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Plant and Pest Digital Library Project, Purdue University, West Lafayette, Indiana.