From Alpha v1.0.11 through to 1.6.4, the item form of sugar cane almost perfectly matched the colors of sugar cane when placed. However, in 13w36a, sugar cane was made to have a biome-based tint when placed, and the item was not updated to remedy this, and therefore the item will never match the placed form of sugar cane. The Texture Update did nothing to remedy this, as the item was still based on the older item.
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Seems like a feature request. It would be removing a feature to prevent cane from changing color depending on the biome, and changing the color of the held cane would require even more work.
Note that the same logic does not apply to other blocks affecting by color tint, like the color of grass will not properly much its placed texture etc.
This is a feature request.

No, it is not.

Actually, it is, no items are affected by biome coloring, even grass is assigned a static color when it is an item.

Well there's the problem: the sugar cane item doesn't have said static tint.
Not that it would even need a tint anyway, as a retexture would suffice anyway.

It doesnvt need one as it already has a non-grayscale color. Asking this to be changed is a feature rewuest, and not a bug.

Also note MC-201246, which is extremely similar but was given a pass. I still fail to see how this is a feature request.