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Breakfast club boost: Is orange juice about to rally?

Breakfast is starting to look delicious on Wall Street. While traders are watching the coffee rally—futures are up 86 percent this year—there's another breakfast club member that's poised to wake up: orange juice.

After losing to stocks big time in 2013, commodities have started the year with a bang. Lean hogs, oats and milk have led the lift with solid boosts in their futures prices – each posting a whopping 37-percent, 27-percent and 22-percent jump, respectively, year to date. It doesn't look like the entire commodity sphere will be taking off, however. Laggards in the arena include copper with a 13-percent drop, as well as gas oil and heating oil both recording a 5-percent decline so far this year.

Oranges sit in crates during a citrus harvest at the Rancho Del Sol Organics farm in San Diego County, California.
Sam Hodgson | Bloomberg | Getty Images
Oranges sit in crates during a citrus harvest at the Rancho Del Sol Organics farm in San Diego County, California.

Orange juice futures have jumped 11 percent year to date, according to CNBC Analytics. Measured as frozen concentrated orange juice per pound, the commodity is trading at $1.51. And it could reach $2 per pound later this year, a level OJ hasn't seen since hitting the record-high $2.26 mark in 2012, said Shawn Hackett, president of commodity brokerage firm Hackett Financial Advisors.

(Read more: Why this could be the year of the commodities comeback)

A key factor is supply. U.S. production has been decreasing for years due to a citrus greening disease in Florida, the second-largest producer of orange juice in the world after Brazil. Other than replacing the tree, there's still no solution to eradicate the disease, which slows root growth and makes fruits bitter.

"This disease problem continues to get worse and worse, and production is just falling off the cliff," Hackett said.

In fact, the U.S. Department of Agriculture recently lowered its 2013-14 forecast of Florida orange crops to 114 million boxes, down from 134 million boxes a year earlier.

Until now, Brazil has been able to make up for the Sunshine State's low production. But its drought problem—the worst in decades—may provide the latest push for the commodity's run. Hackett says Brazil's weather situation will bring down orange production, making the supply picture extremely bullish for the next year or two.

(Read more: Price of the all-American egg and bacon breakfast harder to swallow)

Though Hackett expects to see a near-term correction, he still believes orange juice is one of the better options for investing in commodities.

"Brazil is putting a little fuel to the fire," said Mike Seery, president of Seery Futures. He expects orange juice to follow coffee's upward trend, noting that Brazil isn't going to produce as big of an orange crop.

"I definitely think there's an upside to orange juice prices," he added.

Others aren't feeling so rosy for the commodity. The orange juice market is missing must-have ingredients for a price rally: frost, demand and a pesticide problem that could push the market up, according to Citi futures specialist Sterling Smith.

"Unless something goes wrong or causes a surge in demand, I don't see where we have the driver here," he said. "If we can't trade $1.60 here sooner than later, some of the long money may be getting tired now that it's not frost season."

(Read more: Orange juice is getting squeezed from the breakfast table)

Smith sees another hurdle for the commodity—the decrease in orange juice demand in the U.S.: "The human diet is as much habit as anything else, and people sort of started to take it off the table," he said. "Every time you lose drinkers, they don't necessarily come back. They find other substitutes."

Still, Seery stands by his position that orange juice will be among the commodities to benefit as investors' fears about deflation fade.

"Prices were going low across the board for commodities last year. That's gone," Seery said. "Now, it's the fear of inflation, which is causing prices to go up."

—By Jaewon Kang, special to CNBC.