Ethanol has been in the news a lot as of late, from the U.S. Department of Agriculture’s raising projected use of corn to make the fuel, to the Environmental Protection Agency’s decision to delay raising the blend rate, to the CME Group’s launching a distillers’ dried grain futures contract, to the Renewable Fuels Association’s annual meeting last week.

Not too long ago some appeared ready (and willing) to pronounce the ethanol industry dead, or at least dying, as it went through a major shakeup and consolidation. Instead, ethanol may prove to be one of the few bright spots for an otherwise bearish corn market.

In its Feb. 9 World Agricultural Supply and Demand Estimates, the U.S.D.A. raised its projected use of corn for production of ethanol by 100 million bus, or 17%, to 4,300 million bus, equal to 33% of the record large 2009 corn crop of 13,151 million bus. At the same time, the department lowered projected 2009-10 corn exports by 50 million bus from its January projection, although exports still were expected to be up 8% from 2008-09. Feed and residual use was unchanged from January at 5,550 million bus, but up 6% from a year earlier. Food and seed use was lowered by 5 million bus, to 1,265 million bus, and was down 9 million bus from the prior year. Lower food use was attributed to reduced demand for corn to make corn sweeteners.

Average corn prices in 2009-10 were forecast to fall in a range of $3.45@3.95 a bu, down from $4.06 in 2008-09 and below a record $4.20 in 2007-08.

Ethanol production in 2009 was estimated at a record 10,600 million gallons, up 15% from 9,235 million gallons in 2008 and just above the Renewable Fuels Standard (R.F.S.) of 10,500 million gallons, according to the R.F.S. Production in 2010 could approach the of 12,000-million-gallon R.F.S., which tops out at 15,000 million gallons for first generation ethanol (mostly corn based) in 2015. It has been estimated that it will take about 5,000 million bus of corn to produce that much ethanol.

The CME Group last week said it would launch a distillers’ dried grain futures contract on April 26.

“The electronically traded and physically delivered futures contracts can be used by livestock and ethanol producers, commercial corn interests and others to lock in the price of feed or to hedge their ethanol refining margin in combination with corn, natural gas and ethanol futures,” the CME Group said.

DDGs are the primary byproduct of the ethanol making process, returning about a third of each bushel of corn back as livestock feed. Once seen as a potential problem, DDGs have become a “star” of sorts for the industry, with exports topping $1 billion in 2009.

Ethanol still has some uphill battles, such as the issue of international indirect land use, the gasoline blend “wall,” water usage and economical production of second generation and cellulosic ethanol, among others. But with even larger corn plantings and production in 2010 forecast by the U.S.D.A. at its annual Outlook Forum last week, in a time decreasing livestock herds, falling corn sweetener demand and increasing foreign competition, corn growers need ethanol more than ever. With the addition of DDG futures to complete the component aspect of pricing, and with recent the shakeout of less efficient or credit strapped ethanol producers, the industry may well have settled in for the long haul.