I know this is an old thread, but I figured I’d share my own findings on the current version.
The landscape materials seems to ignore the Phys Material selected in both the details panel and within the landscape material itself. Instead you need to go to the Layer Info and change the Phys Material there.
If you don’t know how to find the Layer Info then go into the Landscape paint tool, find the layer you want to set the Phys Material and click “find in browser” and it will direct you to the folder where all these Layer Infos are stored.