Milk Bucket

Milk is found in Alpha and Beta mode. It is obtained from cows by using (i.e., right-clicking) a bucket on a cow. A single cow may be milked over and over again, but do not always yield milk when they are clicked. However, if you stand one block lower than a cow and use a bucket from that angle, the cow will grant milk at a 100% rate. Milk's only use is to craft cake. Milk buckets used in the production of cake are returned after being used in the crafting process. If milk is dumped on the ground, it will disappear.

Trivia

 * Before Beta 1.2, milk had no use.