Andy,

So if there's plenty of corn product left after stripping out the alcohol, then why are the livestock feeders freaking out about the shortage of corn?

Why has the price of feed even gone up for them?

Corn gluten is a poor food additive for cattle. Perhaps it can be useful for poultry in small quantities, but the price of DDG has gone down since the rise of ethanol. Perhaps McDonald's will invent a burger-like substance from DDGs which can be deep fried, sweetened and salted, then sold to obese human beings.

As a midwestern pork producer faced head on with a doubling of corn price in six months, I can tell you that there will be reduced meat protein in grocery stores. One 56# bushel of corn yeilds 17# of dry distillers grains. Pigs and chickens can effectively utilize small quantities of DDGS in the diet (about 10-20%). Beef can and are using 40-50%, and can theoretically utilize 100%. before the ethanol boom DDGS delivered was about $200/ton, today it's about $140. Another consideration is the plants eventual use of distillers grain to fuel the plant.

http://www.physorg.com/news78508751.html

The technology involves partial combustion of biomass – that could include corn stalks, distillers grains, waste wood or other biorenewables – to produce a mixture of hydrogen, carbon monoxide, methane and other flammable gases. The resulting mixture is known as producer gas and it can replace natural gas in an ethanol plant's heaters. The producer gas can also be upgraded to what's known as syngas, a mixture that can be converted into high-value transportation fuels, alcohols, hydrogen, ammonia and other chemicals.

Producer gas is made by injecting biomass into a fluidized bed gasifier, a thermal system that pumps air up through a bed of hot sand, creating bubbles and a sand-air pseudo fluid. A reaction between the biomass and the hot sand-air mixture produces flammable gases. The process also generates its own heat to sustain the reaction. It's a system that's reliable, produces few emissions and can be efficiently integrated into a plant's existing natural gas boilers and dryers.

A plants distillers grains will supposedly supply >100% of it's energy needs.

I've heard the economics of this are favorable, perhaps someone knows more about this than I.