As a primary teacher using the new reporting system I have seen time and again the confusion over the new reports, but have to agree with previous posters here with your situation.

The A, B C etc is NOTHING like the old A, B C's in old reports.... In order to achieve At expected level (C) most teachers look at each subject and strand and then look at the indicators to show that the child is achieving these indicators. In order to put a child up from a C to B (above expected level) generally means that they are achieving at least or roughly 80% of those indicators. So for him at grade 2 June means he would be working where most students across the state and in the school would be expected to be at the END of grade 2. That is a pretty big jump.

I hope that clears it up for you a bit. It is not as simple as saying, "oh this student is outstanding in literacy" and putting them up to a B which in any case is nothing like the A's, B's and C's we are used to from when we were at school. The comments are generally for students attitudes, behaviour and work habits. You really need to do a huge mental shift away from what the letters stand for and focus on the fact that he is performing at expected level for his age, which, in my opinion is outstanding and what I want for all of my students in my grade.

To put it in a bit more perspective - I have a grade 4 student who in the holidays doesn't get a holiday. She does hours of Maths, English and Chinese homework every day of the holidays.... her weekends are the same and she does Maths work every morning before school. Not much of a life really - when does she get to be a kid? Well the answer is in this case she doesn't.

She is brilliant at Maths, to the degree that the teacher who I grade share with and I occasionally find her work from grade 5 texts to do, and also extend the work she does in grade 4. In number on her report she was at a B and her mum and her were upset because it wasn't an A..... She is working above the average grade 4 student but for us to put her up to an A meant she could do roughly 80% of the work in the middle of grade 5 and we didn't feel she was quite there yet. It was tough explaining the shift and really, the government has botched it nicely for us all, but that is the way it is and C is to be "Celebrated".
HtH.