You can say both, but more commonly people say "I need to practice", "I need practice" or yours "I'm out of practice." Or people often say "I'm a little rusty." (an idiom that means 'I am out of practice.')

Based on your idea, it should be "I lack of practice/practising". Anyway, that structure sounds a little formal. You should use "I don't have many chances to practice" About "I'm out of sth". For example, I'm out of money. That means you're using up your money so you don't have much left. By then, you need to ask your parents for money or go to the bank :D