Balsam Poplar Catkin (not a cocoon) on Balsam Fir Tree
If you see these strange structures on a Balsam Fir tree, it may at first look like an insect cocoon or egg case, but the structure in the photo is of a Balsam Poplar catkin (Populus balsamifera) that has fallen onto a Balsam Fir tree. The part that looks like a fuzzy caterpillar is the catkin/flower of the Balsam Poplar tree and the Reddish-brown structure, that looks like a smaller version of a moth cocoon, is the bud scale. These structures are adapted for wind dispersal and often land on trees together, making them look sometimes like they are physically connected to the tree. The attachment is aided by a sticky substance the buds are covered with that smells like balsam — perhaps the source of the name.
These pictures were taken on Memorial Day weekend in Spruce-Fir Northern Hardwood Forest in Northeast Vermont.