Beat sugar and butter in large bowl with mixer at medium speed until creamy. Beat in egg, vanilla and almond extracts. Mix flour and baking powder; stir into butter mixture.
Divide dough in half; tint half with red food coloring. Wrap each half and refrigerate at least 2 hours.
Divide each half into 32 pieces. Roll each piece into a 5-inch rope. Twist 1 red and 1 white rope together and bend 1 end to form candy cane shape. Place on ungreased baking sheets.
Bake in preheated 350-degree oven for 8 to 10 minutes or just until set and lightly golden. Remove from cookie sheet; cool on wire racks. Store in airtight container.