If you go to Italy and order a coffee, they'll serve it with full fat milk that's been steamed to perfection. You'll love it and come back telling everyone how good the coffee is in Italy. But it's not just about the coffee - it's also about the milk. So if you want the velvety texture and natural sweetness that comes from slightly caramelised milk, it's essential to steam properly.
Milk steaming should happen in two distinct stages: stretching and spinning. Stretching means introducing air into the milk via the steam wand to increase its volume, while spinning is whipping the steamed milk into the desired velvety texture.
Start with a clean cold pitcher, a milk thermometer and cold fresh milk. Use only as much milk as you need for the drink.
To begin stretching, sink the tip of the steam wand deep into the milk and open it right up. Bring the tip up to just below the surface so you hear a ch-ch-ch sound. If there's no sound the steam wand is too far down, meaning you aren't introducing air into the milk, you're just heating it. Conversely, if you start producing big, bulging bubbles or you hear screeching, you're too near the surface. When the temperature reaches about 30°C you enter the spinning stage of milk steaming. Sink the steam wand into the milk on one side of the pitcher and tilt it slightly to get the milk spinning until you get to about 70°C. Spinning helps achieve those micro-bubbles that give the velvety texture you're after.
How hot can you go? Depends a lot on what you're using it for and how you're serving it. The ideal temperature for immediate consumption is between 65°C and 70°C. Much below that and you'll miss out on the caramelising effect and above that will be too hot.
You actually need to shut off the steam roughly 5 degrees before the desired temperature. There's always a bit of a lag to the thermometer. If you shut the steam wand off at 60°C you'll quite likely see the needle continue to coast upwards and generally settle at 65°C or a little higher although it depends on the type of machine you're using.
Once you're at the desired temperature, remove the steam wand and clean it carefully with a damp cloth, whilst swirling the milk in the pitcher with your other hand to gloss the milk. Bang the pitcher on the counter if you can see any large bubbles and swirl again.
And you're ready to pour!
From http://www.beyondthebean.com/knowledge/barista-tips/steaming-milk-perfectly