Sugar futures declined on Tuesday, after rising in the previous two sessions, on higher supplies amid a fall in demand, but analysts expect sugar prices to recover as a key producing state fixed a higher price for cane. India's top cane producing Uttar Pradesh state raised the price sugar mills must pay for the new season crop by up to 16 percent to 290 rupees per 100 kg, which could encourage farmers to plant more.

The key January contract on the National Commodity and Derivatives Exchange (NCDEX) was trading 0.15 percent down at 3,294 rupees ($60.41) per 100 kg at 1052 GMT. On Monday, the contract rose as much as 3,312 rupees, the highest since December 3. Spot sugar edged down 5 rupees to 3,342 rupees per 100 kg at Kolhapur in top-producing Maharashtra state.

Copyright Reuters, 2012