I've never heard this usage before, but here are a couple of definitions from Wiktionary: punk: "Any material used as tinder for lighting fires, such as agaric, dried wood, or touchwood, but especially wood altered by certain fungi." punky: "Of or pertaining to punk (touchwood) - soft or rotted." I'm guessing that "punky" in this case refers to the fact that the wood he's talking about is particularly good for starting fires.