Use of the correlation between input variables in estimating the risk of feedlot finishing of steers and young steers

Abstract

The objective of this study was to evaluate the risk of feedlot finishing of steers (22.8 months) and young steers (15.2 months), using or not a correlation between the random input variables (data collected from 2004 to 2010) in the simulation of the Net Present Value (NPV) financial indicator. The animals were fed a diet containing roughage:concentrate ratio of 60:40 for 34 and 143 days, respectively, until they had reached a predetermined slaughter weight of 430 kg. For the NPV simulation, Latin Hypercube sampling was used, with 2000 interactions. The stochastic dominance analysis, test of differences between pairs of curves of cumulative distributions and sensitivity analysis were carried out. The NPV simulation using the correlation resulted in the best option for risk estimate. The confinement of young steers was the alternative of investment most viable than confinement of steers (NPV ≥ 0 of 80.4 vs. 62.3% in the simulation with correlation, respectively). Sensitivity analysis determined the following items had the greatest impact on the estimate of NPV: prices of fat and thin cattle, initial and final weights, diet costs, minimum rate of attractiveness and diet intake.