Young children with diabetes can have ketones in the urine in the morning for the same reason I just described in children without diabetes. The production of ketones in this case is not related to the blood sugar. The most common reason for ketones to appear in the urine in children with diabetes is when there is not enough insulin. In this case, the blood sugar is high because the body can't make enough insulin to use the sugar for energy, and fat is broken down. Once ketones are produced, it may take 24 hours to clear them from the body even if the blood sugar is returned to normal.
Ketones can cause nausea, abdominal pain, and vomiting.
Ketones can also be produced if the child is sick, say with a stomach virus, and the blood sugar goes high because the body can't make extra insulin which is necessary during illness. If extra insulin is not given, ketoacidosis can develop rapidly. The third reason for ketones to appear is in response to a previous low blood sugar. This is what I was referring to in the question about the child on the pump with ketones in the urine in the morning with a blood sugar of 184. This usually occurs because the body makes hormones like epinephrine which cause the body to release sugar which has been stored in the liver.