At 0937 GMT, the key January contract on India's National Commodity and Derivatives Exchange (NCDEX) was down 0.27 percent at 3,287 rupees ($60.12) per 100 kg, after dropping to 3,283 rupees earlier in the day, a level seen on October 27.

Spot sugar fell 17 rupees to 3,405 rupees per 100 kg at Kolhapur in top-producing Maharashtra state.

"There is nothing in the market to support prices. Demand is low, supplies are more. We expect prices to fall further," said Mukesh Kuvadia, secretary of the Bombay Sugar Merchants Association.

Softening global sugar prices are also hurting sentiment, Kuvadia said.

Traders expected local sugar prices to find support from a delay in cane crushing in northern Uttar Pradesh state, where farmers and mills are waiting for the state government to announce the state-advised price for cane. But this didn't happen and prices fell in both the futures and the spot markets, Kuvadia said.

The government has allowed sugar mills to sell 7 million tonnes of sugar in the open market between December and March, including 200,000 tonnes of unsold stock from the October-November period, higher than the average monthly allocations of about 1.7 million tonnes.