Context Water is widely assumed to be the factor most limiting the growth of annual crops in rainfed environments, but this is rarely tested at sub-continental scale. Aims Our study aimed to determine the key environmental and management variables influencing the yield of wheat and barley in the grain-production regions of southern Australia, using data from National Variety Trials. Methods We used generalised additive models to determine the importance of climatic and management variables on wheat and barley grain yield. We determined the effects of the best one, two or three variables and their interactions. Key results The aridity index, defined as the ratio of cumulative rainfall to potential evapotranspiration, was the single strongest determinant of grain yield for both crops. Model performance was further improved by separating the aridity index into pre-seasonal and seasonal components. Interestingly, other variables that might be expected to influence yield, such as nitrogen fertilisation and extreme temperatures, had relatively minor effects. A comparison between data collected over two 6-year periods showed that there had been yield gains and increased water-use efficiency with time, especially in wetter environments. Conclusions Our findings illustrate the importance of water availability for grain production in this region and suggest opportunities for benchmarking and yield prediction through use of readily available climate data. Implications Our study reinforces the importance of factors such as water-use efficiency and drought tolerance as goals for cultivar development and agronomic research in wheat and barley. It also highlights the potential of National Variety Trial data as a resource for understanding grain production systems and climate resilience. Further work could explore the value of additional variables and improved weather data.