The Used Equipment Market Resilience Amid Commodity Downturns

The global commodity markets have faced significant headwinds in 2023–2025, with prices projected to hit six-year lows by 2026. Yet, amid this downturn, the used equipment markets in agriculture and construction have demonstrated unexpected resilience, signaling a strategic reallocation of capital and sector rotation that investors and businesses are increasingly prioritizing. This analysis explores how these industries are adapting to economic pressures, leveraging used equipment as a cost-effective alternative, and reshaping investment strategies to navigate volatility.

Agricultural Equipment: A Shift to Cost-Efficiency and Livestock-Driven Demand

The agricultural sector has long been cyclical, but the current downturn has accelerated a shift toward used equipment. By 2024, late-model used agricultural machinery prices had fallen 18% to 25% year-over-year, driven by oversupply and weak demand for new equipment. However, by mid-2025, the market stabilized as buyers flocked to four- to seven-year-old machinery, which offered a balance between affordability and reliability. This trend reflects a broader reallocation of capital away from new equipment-still burdened by high prices and extended lead times-toward used assets that meet immediate operational needs.

A critical driver of this resilience is the livestock sector. Rising beef prices and increased demand for livestock-specific equipment, such as feeding and manure-management systems, have provided a lifeline to the agricultural equipment market. This niche demand has insulated certain segments from the broader downturn, creating a unique opportunity for investors to target specialized machinery. As one industry analyst notes, "The livestock boom is a tailwind for used equipment", particularly in regions where dairy and cattle operations are expanding.

Construction Equipment: Policy-Driven Recovery and AI-Driven Infrastructure

The construction sector, while more volatile, has also shown signs of stabilization. Global construction activity growth was revised downward to 1.74% for 2025, with infrastructure and industrial projects outperforming residential construction. This divergence highlights a strategic reallocation of capital toward projects with clearer long-term value, such as energy facilities and data centers. The rapid deployment of AI infrastructure, in particular, has spurred demand for construction equipment, with firms pivoting to secure contracts for hyperscale data centers.

Policy initiatives have further bolstered the sector. The One Big Beautiful Bill Act (OBBB), which offers 100% bonus depreciation for qualifying projects initiated before 2029, has incentivized firms to prioritize nonresidential industrial construction. This legislative push, combined with anticipated foreign direct investment of $5–8 trillion, targeting energy and industrial projects, has created a favorable environment for construction equipment demand. However, challenges persist: U.S. construction spending fell 3% by July 2025, driven by declines in commercial and manufacturing sectors, underscoring the need for selective investment strategies.

Strategic Capital Reallocation: From Commodity Exposure to Defensive Sectors

The broader economic context has amplified the importance of sector rotation. As commodity prices falter, investors are shifting capital toward defensive sectors like utilities and consumer staples. In agriculture and construction, this has translated into a preference for used equipment over new purchases, as well as a focus on projects with policy tailwinds. For example, CNH Industrial reported an 8% increase in construction equipment sales in Q3 2025, driven by North American and EMEA shipments, but adjusted earnings plummeted 59% due to tariffs and geographic mix challenges. This highlights the need for investors to balance exposure to cyclical sectors with defensive allocations.

Moreover, the construction sector's pivot to data center construction exemplifies a strategic reallocation of resources. Firms are re-evaluating project portfolios to align with AI-driven infrastructure demands, even as residential construction declines. This shift mirrors broader macroeconomic trends, where capital is flowing toward sectors with clear growth trajectories, such as advanced manufacturing and cybersecurity. As the market update notes, capital is shifting toward policy-driven growth areas.

Future Outlook and Investment Implications

Looking ahead, the used equipment market is poised for further stabilization. By Q4 2025 and Q1 2026, demand for late-model machinery is expected to drive value appreciation, particularly in Europe and North America. Investors should also monitor the livestock sector's continued impact on agricultural equipment and the OBBB Act's role in sustaining construction activity. However, risks remain: rising tariffs, labor shortages, and inflationary pressures could disrupt near-term gains.

For investors, the key takeaway is to adopt a dual strategy. First, prioritize used equipment in agriculture and construction, where pricing has normalized and demand is resilient. Second, allocate capital to policy-supported projects, such as data centers and industrial infrastructure, which are less sensitive to commodity cycles. As BlackRock notes, "In a low-growth, high-volatility environment", defensive equities and hard assets will remain critical for portfolio resilience.

In conclusion, the used equipment market's resilience amid commodity downturns underscores the importance of strategic capital reallocation and sector rotation. By leveraging cost-effective used assets and aligning with policy-driven growth areas, investors can navigate economic uncertainty while capitalizing on emerging opportunities in agriculture and construction.