U.S. soybean futures fell sharply on Friday as investors saw rain damage to crops in Argentina as sufficiently priced in after a surge this week to a nine-month high.

Soybeans were still set for their biggest weekly gain since October 2014, with a 5 percent rise over the week, after a flurry of investment fund positioning encouraged by the rain risks to Argentina's harvest.

Corn and wheat each fell for a second session, also giving up some of their strong gains this week, with analysts saying large global supplies were limiting prices.

The Chicago Board Of Trade most-active soybean contract was 2.3 percent lower at $10.04 a bushel by 1049 GMT, retreating from Thursday's peak when prices hit their highest since July last year at $10.43-3/4.

"The price fall since yesterday is no doubt attributable to profit-taking in line with the motto 'buy the rumor, sell the fact'," Commerzbank analysts said in a market note. "As had been anticipated, the Buenos Aires Grain Exchange and the Argentinian Ministry of Agriculture have revised their estimates for the Argentinian soybean crop significantly downwards in response to the crop damage caused by rain."

The Buenos Aires Grains Exchange on Thursday lowered its 2015-16 soybean crop estimate to 56 million tonnes from a previous forecast of 60 million tonnes, while shortly afterwards the agriculture ministry marked its estimate down to 57.6 million tonnes from 60.9 million.

An official estimate showing Canadian farmers intend to plant less canola than expected in 2016 also lent support to oilseed markets.

The expectations of reduced output in Argentina and tight domestic corn supplies and dry growing conditions in Brazil have encouraged investor flows into agriculture commodities.

Traders estimated net fund buying in soybeans ranged from 17,000 to 20,000 contracts on Thursday.

Despite a potential tightening of crop supplies in South America, global inventories remained substantial.

"We believe the current rally in corn and soybean prices will stall over the coming weeks as fundamental factors, which remain largely bearish, eventually replace bullish fund positioning as the key driver of prices," BMI Research said in a report.

The most active CBOT corn contract was down 1.2 pct at $3.85-1/4 but was up nearly 2 percent over the week, putting it on course for a third consecutive weekly gain.

Wheat was down 2.6 percent at $4.90-1/2. It was still up over 6 percent this week.