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Fill Pyrex batter bowl (my preference) or 2-quart microwave-safe glass container with milk.
Heat on HIGH in microwave until bubbles begin to appear around the edge. Temperature should reach 175-180 degrees after you stir it. (In my microwave, it takes 17 minutes on HIGH). You can also heat milk on the stove if you prefer. It will take a lot longer and be careful not to scorch it.
Allow milk to cool until temperature drops to between 100 and 115 degrees. This is the step (more than any other) where more people ruin their yogurt. In the beginning of your yogurt adventures, get yourself a thermometer and check!! Too hot and the little yogurt bodies will be murdered!
If a skin forms, remove it.
Whisk in 1 tablespoon unflavored commercial Icelandic yogurt as a starter or use yogurt from a previous batch of your own homemade yogurt. No need to heat or warm it ahead of time.
Cover milk and place in a warm environment where the temperature stays around 100 degrees.
Allow to incubate for 5-12 hours. The longer you incubate, the more tart your yogurt will be.
Strain thickened yogurt. (If yogurt has not set, it will not readily strain.) I use this method. No cheesecloth required. I highly recommend it.
Let yogurt sit in the strainer till the yogurt is reduced down to a quarter of the original volume. Time to strain may be as long as 8-10 hours. Tip the strainer or stir very gently if whey has pooled on top while straining.
Empty whey from batter bowl and pour yogurt out of strainer back into the original bowl. Use a good whisk or portable mixer to beat until smooth or leave as is. Chill.
I'm told it will stay fresh for 3 weeks. We eat it too fast to know.