The youngster is in the final year of his contract with the club and has been linked with severa clubs.
Reports say Sturridge wants around £65,000-a-week in order to sign a new deal with City.
“We want Daniel to stay because he’s an outstanding player but we are now in a situation where he is in the last year of his contract,” Hughes told The Times.
“Because of that, he knows, and his advisers know, that puts him in a position of strength when it comes to the terms of his contract.
“But there has to be an understanding from his advisers that there is a level for everybody. Daniel has made something like five Premier League starts and is still making his way in the game.”
He added: “At the moment, we’re not even close to an agreement. We’ve made it clear we feel, for the sake of the player, that this is the best place for him.
“Unfortunately, other things seem to be of more importance to the people around him, but we’re trying to make sure Daniel is here and not anywhere else.”