Bank foresees reduced financial hit from damaging Prairie rains

A leading Canadian bank is predicting Prairie farmers whose crops were devastated by heavy rain this summer will take less of a financial hit than first projected.

SASKATOON — A leading Canadian bank is predicting Prairie farmers whose crops were devastated by heavy rain this summer will take less of a financial hit than first projected.

The Bank of Montreal (TSX:BMO) has lowered its loss estimate for the region to $1.5 billion from its preliminary estimate of $3 billion.

BMO says the change reflects stronger prices due to production troubles in major exporting countries, and reduced forecasts for global production and stocks.

But Douglas Porter, deputy chief economist with BMO Capital Markets, says while the estimate is lower, the losses still weigh heavily on Prairie economies.

In Saskatchewan alone, the 2010 grain harvest is estimated to have fallen 36 per cent below last year’s level.

Porter says he believes the decline in crop production alone carved more than three percentage points from real GDP growth in the province for the year.