Magnolia trees generally prefer a somewhat acidic soil. That's the reason why some folks who have a soil that's too alkaline sprinkle coffee grounds on the earth around their magnolia trees: They're trying to acidify the soil.
Do I recommend that you automatically adopt your grandmother's practice? No, not unless you have a soil pH test done to find out whether your own soil is acidic, alkaline or has a neutral pH. If such a test indicates that your soil is way too alkaline, then fine, use the coffee grounds as your grandmother did.
But otherwise, I wouldn’t apply the coffee grounds directly on the earth around your magnolia tree. Further acidifying soil that is already sufficiently acidic might be counterproductive. But there's still no need to waste the coffee grounds if you're in the habit of making compost. I'd advise you to compost the coffee grounds first, before using them.
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