Powdered sugar
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Powdered sugar (in Britain, Australia, Canada, and most of the Commonwealth icing sugar) is a very finely ground form of sugar that is synonymous with confectioner's sugar. In industrial food production it is used where a quick dissolving sugar is required or as in domestic use principally to make icing or frosting, and other cake decorations. It is often lightly dusted onto a baked good to add light sweetness and subtle decoration.
It is generally mixed with cornstarch or wheat flour, or calcium phosphate to improve its flowing ability and is not generally used to sweeten a beverage, but producers do make industrial grades available without additives.
Caster sugar, generally unavailable in the United States, is a larger particle size approximately half or less in size of granulated.
[edit] Production
Powdered sugar is made from milling, and selective sieving of granulated sugar. Also, powdered sugar is a disaccharide.