Need help! is my bird sick?

Yes, a change in diet can also cause your bird's droppings to change. Colored pellets will often change the color of your bird's droppings. This also holds true if your bird eats brightly colored fruits and vegetables. I'm uming that your bird prefers the yellow pellets because that's the color of his droppings. They may also seem watery because pellets are very dry to eat. Therefore, the bird must drink more water. If your bird is acting normally, and is otherwise healthy, I wouldn't worry.