Unfinished wood soaks up liquid like a sponge. Any liquid that spills on it, including water, stains the wood. Remove water stains as best you can before attempting to apply any finishing products such as polyurethane or tung oil. If you do not remove water stains before finishing, the stain remains visible, ruining the finished look of the wood. There are several good ways to remove the stains.
Oxalic acid is a chemical compound that effectively bleaches wood. Water stains darken wood, so this is a great way to lighten the stain back to its original colour. Oxalic acid is an organic acid that occurs naturally in certain vegetables such as spinach and parsley. Though it is organic, it is highly toxic, so use protective gear like gloves and safety goggles when using this acid.
To use oxalic acid to remove water stains on unfinished wood, mix 2 tbsp of acid with 1 cup of water in a metal pan or bowl. Do not use a plastic bucket or bowl, as the acid will work to eat away at the plastic. Moisten a clean sponge with the mixture until just damp. Gently rub the water stain with the sponge until the stain begins to lighten. Allow the area to dry for at least 24 hours before use. If the stain remains after one treatment, repeat the application of oxalic acid.
After the spot is dry, take fine-grit sandpaper and gently go over the spot to smooth out any raised wood grains. Purchase oxalic acid at most home improvement stores.
If the water stain is in a hardwood like maple or oak, lightly sand it away with fine-grit sandpaper. Gently rub the sandpaper over the stain, brushing away the sawdust often to check on your progress. Stop sanding once the stain is no longer noticeable.
Keep in mind that sanding out water stains does not usually work for pine. Pine is a soft wood and very porous. Once water hits the surface, it quickly seeps down deep into the grain and no amount of sanding will make the water stain go away.
Prevent future water stains by applying a protective coating of polyurethane or tung oil to your unfinished wood. Both treatments repel water and grease and prevent both from penetrating the surface of the wood.