A narrowing premium paid for nearby white sugar futures signals a moderate delivery tonnage against expiry of the Liffe August contract next week.
Dealers said the delivery at the expiry on July 16 was likely to include Brazilian and Thai sugar, and possibly small tonnages of Indian and Mexican sugar, in the mix.
The August-October premium LSU-1=R had dropped from a $31.7 per tonne peak last month to a low of $12.6 per tonne on Thursday.
"If the spread stays at around current levels, I don't think you will see a lot received," one trade source said.
The spread had rocketed last month, despite a growing glut of sugar, and traders said this was largely due to Mexican exporters struggling to obtain the bags stipulated by delivery requirements.
As well as concerns over delivery of Mexican sugar, buying linked to the Muslim festival of Ramadan had contributed to the surge in the premium for nearby supplies.
Some traders said a fire in June at the main warehouse of a refinery in Jeddah belonging to Saudi food company Savola Group , had contributed to the wide spread.
One trade source said production at the installation was likely to be back to normal next month.
The Al Khaleej refinery in Dubai had increased activity to satisfy demand linked to Ramadan, dealers said.
One trade source referred to market talk that a speculator with a substantial long position in the August contract, had started selling the position.
Traders could not rule out the possibility that the spread could widen in the first two days of next week, which would raise the possibility of a larger delivery, but they said the total tonnage was not likely to exceed 300,000 tonnes.
Open interest as of Wednesday stood at 6,638 lots (331,900 tonnes).
