ICE canola futures tank on USDA biofuel rule

All figures in Canadian dollars unless noted

WINNIPEG, Manitoba Jan 15 (Reuters) - ICE canola futures plunged to a one-week low on Wednesday after the U.S. Department of Agriculture published an interim rule for biofuel crops that left out canola, traders said.

March canola RSH5 settled down $11.50 at $630.10 per metric ton

Canola had been trading around $640 until 1 p.m. CST (1900 GMT), when it began falling. Between 1:00 and 1:05 p.m. it crashed to $623.10, a drop of about 2.8%, before recovering in the last minutes of the session.

The decline breaks a bullish move and looks bearish on the charts, traders said.

The USDA rule issues guidelines for corn, soybean and sorghum to prove themselves to be "climate-smart" and potentially qualified for tax and other government support for use as biofuels. Canola has not been disqualified from the eventual permanent rules, but some traders fear its absence is a signal that canola might never be approved for inclusion.

Biofuel production has become a major component of demand for canola, and Canada exports canola to the U.S. for use as a biofuel.

In other markets, Chicago Board of Trade soyoil futures BOv1 rose for the eighth consecutive session to its highest prices since November.

Malaysian palm oil futures FCPOc3 closed lower on Wednesday amid a lack of fresh demand.

The Canadian dollar CAD= edged higher but was restrained by fears of U.S. tariffs. CAD/

(Reporting by Ed White; Editing by Mohammed Safi Shamsi)

((ed.white@thomsonreuters.com))