At 0923 GMT, the key sugar for February contract on the National Commodity and Derivatives Exchange (NCDEX) was down 0.37 percent at 3,246 rupees per 100 kg. It had earlier hit a contract low of 3,237 rupees.

Sugar fell 5 rupees to 3,245 rupees per 100 kg in the Kolhapur spot market in top producing Maharashtra state.

The cold wave-like conditions in north India are good for sugar production as low temperatures help sugarcane retain moisture and thus boost sugar recovery and this is also weighing on sentiment, traders said.

"Sugar production is going on in full steam across the country and India is heading for surplus output. All these factors are pressuring prices," said Mukesh Kuwadia, secretary of Bombay Sugar Merchants Association.

The government's decision to not to raise import duty on sugar has also dampened sentiment, traders said.

Sugar prices are under pressure due to weak consumer demand during winter, when buying by soft drink and ice-cream makers usually eases.

There could be some recovery in sugar prices next month as winter retreats in northern India and temperatures start rising, Kuwadia said.

Sugar mills in India are expected to churn out 24 million tonnes in 2012/13, down from 26 million tonnes in the previous year, but higher than the expected local consumption of about 22 million tonnes.