In its latest report, the USDA cut its estimate for world wheat stocks by 950,000 tonnes, to 195.8m tonnes at the close of the 2009-10 crop year, citing better prospects for the grain's use in livestock feed.
The reduction was the first since July, since when the department has raised its estimate by more than 14m tonnes, adding in the equivalent of UK wheat production.
However, the USDA continued to raise hopes for world wheat production, which latest data pegged at 678.4m tonnes, 410,000 tonnes higher than the last estimate.
The stocks revision reflected "higher wheat feeding expected for Russia, Ukraine and Egypt", the USDA said in its much-watched monthly report listing global crop estimates.
Russia's use of wheat as an animal feed is expected to jump by 17% to 19m tonnes, a rise which has been reflected in the relatively strong domestic prices of the grain noted by local traders.
The increases more than offset waning expectations for Europe's demand for feed wheat, which is now forecast to fall by 2m tonnes to 125.5m tonnes for the year.
However, the USDA raised hopes for Europe's wheat exports, which it saw coming in at 20.0m tonnes, 1.0m tonnes higher than its last forecast.
The USDA cut 500,000 tonnes from export forecasts for both Australia and Russia. Nonetheless, the department stressed that this appeared only a short-term blip within a long-term trend which has favoured Russia over, in particular, the US in export markets.
"Over the past 10 years, world wheat trade has grown 25%, and Russia has grabbed 70% of that growth," the USDA said.
"This represents a dramatic change for a country that once was a perennial importer of 10m-14m tonnes."