I looked through my scrap pile and found a piece of what I think is ash, which measured 600mm in length and 27mm square.
I'd start by drilling a hole for the pencil, and using calipers I measured the width of a pencil at 7mm. I drilled a 7mm hole, but that was a bit tight so I came back with an 8mm bit, and then the pencil could slide in.
I raised the blade on my tablesaw and then moved the fence so that the workpiece was centred to the blade, and made a cut through the hole, and a bit further. I rotated the workpiece making cuts