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How do I collect wood? When I use the axe to chop wood, it just disappears. Do I need an empty inventory spot to collect it?

Hi Radiobob214

All wood you chop using the axe is stored automaticaly into the lumber shed (the small construction beside your house - it has a sign near that shows you how many lumber pieces you have stored). 

Press Z in front of the lumber shed to pick one piece of wood, used to create fences (but only at your farm field).