The code to show the option is in config/XUi_Menu/windows.xml. Around line 2500.
<rect visible="{buttonsVisible}" pos="0,40" >
<panel name="header" pos="0,0" height="43" depth="2" createuipanel="true" backgroundspritename="ui_game_panel_header" bordercolor="[black]" borderthickness="3" >
<label style="header.name" pos="6,-6" width="550" text_key="respawnTitleMessage" />
</panel>
<simplebutton name="btnOption1" depth="3" pos="200,-70" pivot="center" width="400" height="42" font_size="36" caption_key="lblSpawnOnBedroll" />
<simplebutton name="btnOption2" depth="3" pos="200,-130" pivot="center" width="400" height="42" font_size="36" caption_key="lblSpawnNearBedroll" />
<simplebutton name="btnOption3" depth="3" pos="200,-190" pivot="center" width="400" height="42" font_size="36" caption_key="lblSpawnNearBackpack" />
</rect>
Without testing the resultant look and feel, you could probably just delete the line:
<simplebutton name="btnOption3" depth="3" pos="200,-190" pivot="center" width="400" height="42" font_size="36" caption_key="lblSpawnNearBackpack" />
Cheers