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 you use a milk bucket on a block, the bucket will be emptied.

Trivia

 * Before Beta 1.2, milk had no use.