So, I've been going to different fields and killing different types of youkai, but I can't get any sugarcane to drop. Am I just missing something about the process?

Been wondering about this too...

hi my name is marty mailbox
i too cannot find any sugarcane
this is a horrible festival i am not having any fun

Yeah..
No luck for me either.
Thought it might have been the "newly blue" Kijimun, but I've killed tons and not a single Sugar Cane.

I think they forgot to add the sugarcane drops with the maintenance... It wouldn't be the first time they forgot to unlock or add something after a content update -___-

Wellllll, that sucks. I sent a support ticket in, but I don't know if that'll do anything. It would be nice, if they did forget to add them, to implement them as soon as possible.

any sugarcane news? really having a hard time looking for one... I want that Yukata!!!

Hopefully the problem the unscheduled maint is going to have to do with this (also would be good to fix the Gedoumaru's Hideout issue as well).

Well if the sugarcane drop is fixed, it should drop just about anywhere. Open fields and dungeons.
I've found them in the Training Grounds, Kishinden, Secluded Forest, and the open fields outside Onigashima.

sugarcane is a drop from gloom daruma