http://www.reuters.com/article/GCA-Green...

- Demand for distiller's grain, a byproduct of distilling corn into ethanol, will continue to grow domestically and abroad as livestock producers turn to the feed as a cheaper alternative to corn, analysts said.

And with the ethanol industry gearing up for a better year in 2010 after the financial crisis of 2008 triggered by corn prices hitting record highs, more distiller's grain should be making its way into the U.S. livestock sector.

"If we are going to ramp up (ethanol production), we have to find a home for DDGS (dried distiller's grain with soluables)," said Darrel Good, extension economist at the University of Illinois.

"We will export some of those but domestic feeding will have to absorb a big chunk of that," Good added.

The U.S. Agriculture Department forecast ethanol production to rise by 13.5 percent in the 2009 crop year that began September 1, while corn prices could continue to rise as fuel blenders compete for a larger share of a likely record U.S. corn crop.

A third of the corn used in ethanol production comes out as (DDGS), while the feed costs roughly 22 percent less than corn.