That is exactly what will happen. You will not be able to prevent water from travelling down into the hole (both wicking down the post and when it moves with temperature) and you will simply accelerate the eventual failure of the post by having it sit in a permanent container of water.
A properly pressure treated timber post (with at least 90% preservative absorption) is more expensive than a DIY shed post, but it will likely outlive the panels you attach to it. They are about as close to concrete as you can get whilst retain the advantages of timber.
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