Sugar Cane

Reeds were added in the v1.0.11 patch. They can be found randomly on grass or dirt tiles that are near water and can be up to three blocks tall, more reeds (or other blocks) can be placed on top of it. There appears to be no pattern to the spawn algorithm.

Like Cacti, removing the bottom part causes all parts above it to be removed as well, allowing for quick harvesting; one can also "shave" off the upper sections and leave the bottom section planted. It can be crafted into paper.

Farming reeds is similar to farming crops. Like the real plant, reeds must be planted on a grass/dirt block immediately adjacent to water, unlike crops which can be within four blocks of water. Diagonal blocks, as well as blocks above or below the water stream, won't allow it to be placed. If it can be placed on a tile, it will grow there. Unlike wheat, it does not require a tilled field to grow. Planted reeds grow quickly to a height of three blocks.

You can walk through Reeds, but water will not pass through it. This makes it a convenient material for water gates.

If the water source is removed, when the Reeds next grow, the game will realize it has no adjacent water, and the Reeds will disintegrate, leaving two Reed items instead of one. This is not as efficient as growing Reeds normally, because you must replace the water supply to re-plant the Reeds.