Q: My elm tree is bleeding. The top is sappy but the bottom looks like fresh coffee grounds. This is about a foot tall and six inches wide. The tree itself is ancient.
A: It looks to me like there was originally a limb at that spot which broke off (or was improperly pruned) and so rot started……. and continued into the trunk of the tree. Now there is a bacterial infection and also a colony of carpenter ants living in the hollow.
The ants did not cause the problem but they do like to live in areas of rotten wood.
There is no cure for the bacterial infection. The best thing you can do is keep the tree healthy by appropriately mulching and by watering during the summertime
Eventually I think the tree will close up the hole or wall it off internally.