Moisten a few handfuls of dried shredded peat moss in a bucket with cool water. Stir the moss until it resembles a thick mash, adding more peat moss if the mixture is too wet or more water if too dry. Avoid adding too much water since you only will be removing it later.
Compress the moist mixture by dropping about 2 tbsp. of the peat moss mixture in the center of a cotton rag. Pull up the corners and start twisting them to tighten the rag around the peat moss. The water will run out as you ring it, so work outside or over a sink.
Continue tightening the rag by twisting until no more water drips out. Step on the top of the peat moss wad for a few seconds to flatten it with your weight.
Unwrap the peat moss wad from the rag and place it on a plant tray. Use a pencil point to poke a small hole in the center for the seed.
Repeat the process for as many peat pellets as you need. Plants seeds immediately in the moist moss instead of drying it out and later reconstituting it.