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))