National Geographic reports on a study which suggests that birds can “see” the Earth’s magnetic field. From the article:

• Scientists have thought for years that migratory birds may use an internal compass to navigate between their nesting areas and wintering grounds.
• The new research helps explain how this natural compass may work.
• The finding strongly supports the hypothesis that migratory birds use their visual system to navigate using the magnetic field.

This would only allow the bird to know it’s direction, and not its position, so there must be more to it. Another study is also referenced suggesting that “birds may use magnetic crystals in their beaks to sense the intensity of the magnetic field and thus glean information on their physical location.”