I would use a centimetre.
Centimeters/inchesThe most appropriate metric unit for the purpose of measuring the length of a pencil would be centimetres.
Centimetres or millimetres (for precision).
An average pencil when new would be around 15 centimetres long.
We can easliy measure the lenght of a pencil using a ruler.
Any metric unit would do. But it might be easier to pick something smaller than the length of the pencil, like a centimeter, or a millimeter.